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About 85 percent of investment advisors are not yet putting clients’ funds into cryptocurrencies, according to a Bitwise Asset Management survey, released in January, of 500 financial advisors.
Among the 15 percent who include crypto in clients’ portfolios, digital assets typically make up no more than 5 percent of the clients’ holdings, the survey found.
Two years ago, 6 percent of advisors were steering clients to crypto, a number that rose to 9 percent in 2021.
In December, a survey of 80 advisors by marketing research firm Cerulli Associates found about 24 of those advisors were talking up crypto as a way to distinguish themselves from competitors.
Crypto trading exploded over the past two years, with Bitcoin rocketing from $9,000 to as much as $69,000. However, crypto markets are capricious, with values rising or falling on something as flimsy as a stray comment from Elon Musk.
Such volatility makes financial advisors nervous. Most people who seek an advisor’s counsel are older and less willing or able to take risks with their money.
Advisors also are cautious because U.S. federal regulators are still determining how to regulate digital assets. The U.S. Securities and Exchange Commission has approved only one Bitcoin exchange to operate in the country so far, although crypto can be bought and sold directly between people, skirting regulations.
However, 94 percent of advisors responding to the survey reported receiving questions about digital currencies but “I have a hard time recommending it as an asset class,” Adam Koos at Libertas Wealth Management Group told the Financial Tim.
“When you talk to your clients about stocks or bonds, in almost all cases I can confidently say they’re not going to zero,” he said.
TREND FORECAST: Crypto’s evolution from an exciting gamble to a reasonable investment will continue. As we noted, it will be paced in parallel with regulations.
Also, with the maturing of people now under 40 who are growing up with crypto and are citizens of the new Metaverse World, they are less leery of cryptos than their elders, and eventually will have more money to risk.
Importantly, the more investment firms that play the crypto markets, the higher prices will rise as it becomes an “official” Wall Street gambler’s game.