“2019 was a breakthrough year for crypto,” states Matt Hougan, Bitwise Managing Director and Global Head of Research. “Crypto was the best-performing asset class in the world last year, with the Bitwise 10 Large Cap Crypto Index rising 54% for the year while demonstrating value as a hedge against geopolitical risk. Meanwhile, we saw significant evolution in the market for crypto custody and liquidity, with players like Fidelity, CME, and Intercontinental Exchange all launching solutions. Advisors are responding to the rapid maturation of the space, as the survey shows, by increasingly planning to incorporate it into their asset allocation mix.”

This statement comes after Bitwise and ETF Trends, released the results of their survey they conducted on the Financial Advisor Attitudes Towards Cryptoassets. Taking place in December 2019, they collected responses from more than 400 financial advisors and their thoughts on the crypto market. 

In the research, they found that 6% of financial advisors currently, have allocations in crypto-assets and that in 2020, 7% more plan to allocate. 38% remained ‘unsure’ if they would allocate to crypto assets.  

What’s stopping them?

When asked why they might consider allocating to crypto, 54% of advisors highlighted the crypto’s “low or uncorrelated returns with other asset classes,” which was the most common motive cited. Yet, regulatory concerns were mentioned as the number one cause preventing them from allocating to crypto. This was unsurprising considering, the long list of high-profile media coverage that has taken place this year. Other concerns include crypto volatility and cryptocurrency valuation. 

What is interesting is that, even though it has been more than two years since the run-up in 2017, client demand appears to be a major driver of advisor interest.  

Out of all the advisors, 76% said that clients have asked them about crypto over the past 12 months. Funny enough, one-third even admitted that they believe that their clients are investing in crypto on their own. 

What’s to come?

“The results of the survey are consistent with the conversations Bitwise has been having with advisors in the field,” said Hougan. “Advisors have a lot of other things to juggle, but crypto is slowly making its way beyond the earliest adopters and being recognized as an important new asset class. As the survey clearly shows, advisors are increasingly interested in considering how its uncorrelated return stream can positively impact client portfolios.”

What will make advisors more comfortable allocating crypto assets in the future? They answered, ‘better regulation’, ‘better education’ and the launch of an ‘ETF’. 

Out of the advisors, 64% said that they expect the price of bitcoin to rise over the next five years. 5% even said that they expect the price of bitcoin to 10x in the next five years and 8% expect it to fall to zero. No surprise with bitcoins price ending 2019 up 90% and has been gaining since the start of the year. Leaving us with high hopes for the future. 

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