Even after reaching a high of $20,000 in December 2017 and now falling over 80 percent to $3,500, financial advisors are finding that clients are still asking about cryptocurrencies, according to a new report by Bitwise Asset Management in conjunction with ETF Trends.
Bitwise Asset Management, the leading provider of cryptoasset index and beta funds, and ETF Trends, a leading source in exchange-traded fund news, tips, webcasts and investing ideas, released the findings of the inaugural Bitwise/ETF Trends Survey of Financial Advisor Attitudes Towards Cryptoassets.
Matt Hougan, Global Head of Research for Bitwise Asset Management, said he was surprised by the level of interest in the survey.
“The survey shows that interest in crypto among financial advisors is growing, despite the recent bear market,” said Hougan. “Advisors are getting questions from clients about crypto and are increasingly thinking about adding a small crypto allocation to client portfolios. We expect this to accelerate throughout 2019 as new firms like Fidelity, NYSE and others enter the space.”
The survey was conducted during the month of December 2018 and asked more than 150 financial advisors a series of questions on cryptoassets and their use in client portfolios. Survey respondents included independent registered investment advisors (RIAs), independent broker dealer representatives, financial planners and wirehouse representatives.
Among the key findings:
- 79% of all financial advisors surveyed received questions from clients on crypto in 2018.
- 9% of surveyed advisors currently manage an allocation to crypto in client portfolios.
- 22% of surveyed advisors plan to either start a new allocation to crypto or increase their existing allocation to crypto in client accounts in 2019.
- 55% of surveyed financial advisors expect the price of bitcoin to appreciate over the next 5 years. The mean price target for December 31, 2023, is $17,571.
Despite its latest price struggles, Bitcoin could get a much-needed boost as Bitwise Asset Management, a leading provider of cryptoasset index and beta funds, recently announced that it filed an initial registration statement on Form S-1 with the U.S. Securities and Exchange Commission (SEC) to bring a physically held bitcoin exchange-traded fund (ETF) to the capital markets.
The regulatory hurdle for a Bitcoin ETF continues in 2019 as the SEC is delaying its decision on other cryptocurrency fund offerings. However, Bitwise’s entry further signals to the obstinate SEC that investors are demanding the product–a notion further backed by the latest survey findings.
“The survey shows that interest in crypto investing from financial advisors not only survived but grew during the bear market of 2018,” said Hougan. “There are clear reasons why: Advisors tell us that they getting inbound questions from clients, that they need ways to connect with a younger generation of clients, and that clients are investing in crypto outside of their advisory relationship anyway.”
While cryptocurrencies have yet to be fully embraced by the public as it battles security and regulatory battles, blockchain, its underlying technology, is beginning to attain more traction as companies, large or small, public and private alike, are beginning to see it as a viable application for a variety of uses in a multitude of sectors. As such, optimism is riding high on blockchain technology becoming more and more prevalent, which could feed into cryptocurrencies moving forward.
“Financial advisors, and particularly ETF-focused financial advisors, are always on the cutting-edge of new developments,” said Tom Lydon, Founder and Editor of ETF Trends. “The survey results suggest that increasingly means having good answers and insights when it comes to crypto. We were excited to see how they are engaging with this evolving market, and to benchmark that engagement via the survey.”
Complete findings from the survey are available here: http://static.bitwiseinvestments.com/Research/Bitwise-Research-ETF-Trends.pdf
For more market trends, visit ETF Trends.