Financial advisors are increasingly bullish on crypto investments

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Financial advisors are increasingly bullish on crypto investments

By Hassan Maishera - min read
Financial advisors at work

The number of financial advisors allocating to cryptocurrencies are on the rise

A survey published by crypto index fund provider Bitwise Asset Management revealed that the number of financial advisors investing in cryptocurrencies has increased by roughly 50% over the past year.

The study conducted by Bitwise and investment website ETF Trends looked into the US-based 1,000 financial advisors last month. According to the results, the number of advisors allocating funds to cryptocurrencies in client portfolios rose 49% last year. Financial advisors were previously allocating 6.3% of the client’s portfolio in cryptocurrencies but have increased it to 9.4%.

Amongst the financial planners that are yet to allocate funds to crypto, 15% indicate the willingness to invest in cryptocurrencies this year. In comparison, 2% are confident that they will invest in the emerging asset class in 2021.

The desire for clients to know about cryptocurrencies is responsible for the rising figures. According to the financial advisors, client interest in cryptocurrency is growing. “81% of all financial advisors report receiving questions from clients on crypto in 2020, up from 76% in last year’s survey”, the report added.

Furthermore, some clients are not waiting for their financial advisors to push them toward cryptocurrency investment as they are doing so themselves. The report revealed that 76% of advisors think clients are (36%) or maybe (38%) investing in cryptocurrencies on their own, outside of their advisory relationship.

Financial planners are also not left behind in terms of cryptocurrency investments. Many advisors stated that they are keen to invest their personal wealth in the asset class, with 24% saying they have already done so.

The primary motivation for higher investment in crypto has to do with its low correlation to other assets. The global economic recession and the Covid-19 pandemic pushed financial advisors towards cryptocurrencies as the assets enjoyed uncorrelated price gains over the past year.

Bitcoin could reach $100,000 in five years

Most financial planners were bullish about Bitcoin’s price over the coming years. 15% of them expect bitcoin to surpass $100,000 over the next five years. The number of bulls is up as only 4% of the financial planners felt that way last year.

The report added that “Meanwhile, the fraction expecting Bitcoin’s price to fall to zero decreased sharply, from 8% in 2020’s survey to 4% this year. This continues a trend: In our 2019 survey, 14% of surveyed advisors thought the price would fall to zero”.

According to Bitwise’s CIO, the survey shows that it is still early days for cryptocurrencies, with less than 10% of planners allocating funds to the market as of today. As adoption and interest grow, financial advisors would allocate more funds to the cryptocurrency market over the coming years.