Survey: Financial advisors are allocating more and more to crypto

[ad_1]

A report by Bitwise Asset Management and ETF Trends found that 94% of financial advisors responded to crypto questions from clients in 2021. There was a roughly even split between advisors considering an investment in crypto stocks compared to investments direct in crypto this year.

According to a recent survey, financial advisors have increasingly included crypto in their clients’ portfolios, and even more fund managers plan to deploy capital into the space this year.

The results, released Thursday by Bitwise Asset Management and ETF Trends, show that the percentage of financial professionals investing their clients’ funds in crypto has increased from 9% to 15% over the past year. Most holdings, for now, are small, with 80% of respondents capping digital assets at 5% of any given portfolio.

Crypto has gone from a tulip-style fad to a real and enduring phenomenon, ETF Trends editor Lara Crigger told Blockworks. Advisors can no longer simply ignore questions. They need to be proactive about crypto education, not just for their clients but for themselves.

The survey included 619 responses from independent registered investment advisers, dealer representatives and financial planners in the United States.

Space allocations increase

To accompany the 15% of advisors who invested in crypto last year, an additional 14% said they will likely or definitely have some crypto holdings this year.

The expected increase comes as 94% of advisors said they received questions from clients about crypto in 2021, up from 81% the year before.

Crigger said she expects advisors adding crypto to their clients’ investment mix to grow sharply, noting that 47% of advisors reported having personal crypto holdings that nearly doubled from the previous year.

It might seem like a weird mismatch, but I think advisers aren’t willing to put their clients through something they haven’t experienced themselves, she said. At the moment they are conducting hands-on research, using their own accounts. If it makes sense, they will apply that knowledge to their clients’ portfolios.

However, more advisers than now remain on the sidelines, citing volatility issues, as well as a lack of regulatory clarity.

Although more than half of respondents say they are concerned about volatility, the same number believe bitcoin will surpass $100,000 within five years. Last year, only 15% believed the cryptocurrency would rise this high over the same period.

Bitcoin was trading around $42,600 as of 4 p.m. ET Thursday, up 1.8% in the past 24 hours.

Ways to Invest in Crypto

Although the U.S. Securities and Exchange (SEC) approved ETFs based on bitcoin futures to enter the market in October, the agency has yet to approve an ETF that would invest directly in the bitcoins.

The SEC on Thursday rejected a bitcoin ETF offered by First Trust and SkyBridge Capital, according to a filing.

The survey found that 82% of advisors said they would rather invest in a spot bitcoin ETF over a futures-based alternative, which could be a long way off in the US.

Meanwhile, other advisors focus on investing in stocks of companies with exposure to digital assets. Around 46% were optimistic about buying crypto-related stocks, compared to 45% interested in buying crypto outright.

The outlook for blue-chip crypto stocks such as Coinbase has turned rosier of late as companies look to diversify their revenue streams. Bank of America research analyst Jason Kupferberg said in a research note earlier this month that he upgraded Coinbase to a buy rating as the company plans to add products. This year.

Research pros at Ark Invest said Coinbases’ position as a crypto on-ramp and its planned additional launches make it an attractive long-term game. The company bought about 200,000 shares of Coinbase across three of its ETFs over a two-day period earlier this month.

Get the best crypto news and insights delivered to your inbox every night. Subscribe to Blockworks’ free newsletter now.

Ben Strack

Ben Strack is a Denver-based journalist covering macro fund adoption, RIAs, financial advisors, crypto native funds, structured products, digital asset integration, and decentralized finance (DeFi) into traditional finance . Prior to joining Blockworks, he covered the asset management industry for Fund Intelligence, and was a reporter and editor for various local Long Island newspapers. He graduated from the University of Maryland with a degree in journalism.

[ad_2]