Investment advisers are still conflicted about putting clients into crypto.
A January survey from BitWise Asset Management of 600 financial advisers found 15% allocated a portion—usually 5% or less—of their clients’ portfolios in crypto in 2021. That is up from 9% a year ago and 6% two years ago.
Still, 85% of advisers still aren’t investing in cryptocurrencies for clients.
Over the past two years, cryptocurrencies burgeoned from a fringe movement into a full-blown investing mania that at its peak was worth $3 trillion. The price of bitcoin jumped from around $9,000 before the pandemic to nearly $69,000 in November 2021. It has been part of the meme-trading mania, a big advertiser in the Super Bowl and even a source of funding for Ukraine after the Russian invasion.
Financial advisers are treading lightly. For some, their own trading rules restrict them from holding cryptocurrencies for clients. Advisers can recommend only regulated investments and there is still a regulatory fog over crypto, so many advisers just steer clear. The Securities and Exchange Commission has approved only one Bitcoin exchange traded fund so far. For other advisers, the volatility and risk are the issue. While the volatility may not dissuade young investors who can afford to take big risks, it is different for investors who have already spent years building a nest egg.
But clients are increasingly crypto curious. In the BitWise survey, about 94% of advisers said they got questions about crypto.
For some advisers, crypto may become a way to reach new customers. A December survey of 80 advisers from Cerulli found that 30% were encouraging crypto investments and saw it as a way to differentiate themselves from other advisers.