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Advisors Bullish on Crypto, See Long-Term Price Rise: Study

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What You Need to Know

  • Ninety percent of advisors in a survey said they had received questions about cryptocurrency last year.
  • A majority of those advisors have clients who invest in crypto outside of the advisory relationship.
  • 2023 presents an opportunity to bring those investments in-house, Bitwise suggests.

Financial advisors continue to be highly engaged in crypto markets despite last year’s sharp market correction, according to The Bitwise/VettaFi 2023 Benchmark Survey of Financial Advisor Attitudes Toward Crypto Assets, released Wednesday.

Fifteen percent of advisors reported that they allocated to crypto in client accounts in 2022. That compares with 16% in the 2021 survey, and is well ahead of the 9% and 6% of advisors who did so in the two previous years.

Although 63% of advisors expect bitcoin’s price to fall this year, 60% believe it will be higher in five years. At midday on Wednesday, bitcoin was trading at around $22,600.

“Advisors and their end clients continue to want to learn more about crypto investments despite the volatility incurred in 2022,” Todd Rosenbluth, head of research for VettaFi, said in a statement. “For those with a long-term focus, interest remains high.”

The Bitwise/VettaFi survey took place from Nov. 25 to Jan. 6, and elicited 491 eligible, complete responses from financial advisors.

Robust Client Interest

Ninety percent of advisors in the survey said they had received questions about crypto in 2022. Fifty-six percent reported that despite market performance, clients’ most common question was, “Should I consider an investment in crypto?”

Asked whether their clients were investing in crypto on their own, 59% said yes, down from 68% in 2021.

“The survey is a reminder that crypto is one of the best business development opportunities in the financial advisor market,” Matthew Hougan, chief investment officer of Bitwise Asset Management, said in the statement.

“Ninety percent of advisors report fielding questions from clients, and a majority say they have clients who invest in crypto outside the advisory relationship. 2023 is the year to bring those investments in-house.”

Of clients investing on their own, 75% were getting exposure via centralized crypto platforms, while 41% were doing so directly from their own crypto wallets. Only 18% were gaining exposure through brokerage accounts they manage on their own.

The survey found that 95% of advisors’ clients with crypto exposure have less than 5% of their portfolios allocated to crypto. Bitwise said this suggests that, for most advisor clients, crypto plays an important, but satellite, role in their portfolios.

Differing Advisor Attitudes

The survey results showed that of those advisors who have not allocated to crypto in client accounts, 46% definitely will not do so this year, while 28% are reluctant to do so, and 24% are unsure whether they will.

In contrast, 78% of advisors who have already allocated to crypto on behalf of clients said they plan to maintain or increase that exposure in 2023.

Bitwise noted that advisors who have allocated may be more knowledgeable and comfortable with crypto’s opportunities and risks, while advisors who do not have exposure may have been put off by last year’s crypto winter — to say nothing of the FTX debacle.

As to advisors’ preferred way to invest in crypto, ETFs were the overwhelming choice, cited by 68% of respondents, up from 58% in the year-earlier survey. Nineteen percent said they prefer direct ownership of individual coins.

(Image: Adobe Stock)