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Survey: There is a 50% spike in the number of advisors recommending crypto to their clients

  • There is an increase in the number of advisors allocating crypto to their clients’ portfolios.
  • Advisors find crypto’s inflation-hedging capability appealing.
  • Bitcoin gained more than 300% in 2020.

The cryptocurrency industry is slowly gaining mainstream recognition thanks in part to major companies and institutional investors vouching for the young industry.

Financial advisors have traditionally refused to throw caution to the wind when it comes to the digital asset industry. However, this is slowly changing as the advisors change their attitude towards the industry.

According to a joint research report released by Bitwise Asset Management and ETF Trends, the number of advisors allocating crypto in the portfolios of their clients rose more than 50% in 2020.

“The percentage of financial advisors who report allocating to crypto in client accounts rose more than 50% last year, from 6.3% to 9.4%. Still, with less than 10% of advisors reporting allocations, this remains the domain of early adopters,” reads an excerpt from the report.

About 1,000 advisors participated in the survey in which they answered several questions on cryptocurrencies and their allocation in client portfolios. 

The survey was conducted in December last year and the participants included registered investment advisors, financial planners, broker-dealer representatives, and wirehouse representatives in the U.S.

Survey results

The survey found that investors are getting more interested in crypto. 81% of the financial advisors said that they had been asked by their clients about crypto in 2020, up from 76% in the previous survey.

17% of the advisors who have not yet dabbled in crypto responded that they will “definitely” or “probably” start allocating crypto in 2021, up from 7% in 2020.

54% of the respondents said they were attracted to crypto because of its low correlation to other assets. This figure is in line with figures from the last survey.

Crypto, especially bitcoin, became an attractive asset to hedge against inflation in 2020 as governments turned to quantitative easing to ease off the pressure of the coronavirus pandemic and the economic downturn that followed.

25% of financial advisors attributed crypto inflation-hedging capability as an attractive feature. This is up from 9% last year.

Advisors are becoming more bullish with 15% of them expecting the price of bitcoin to exceed $100,000 within five years. Only 4% felt this way in the previous survey.

Bitcoin is currently trading above $35K and recently broke the $40K level. The leading digital asset gained more than 300% in 2020, making it the best-performing institutional asset last year.

The report concluded that it is still early days for crypto to emerge as a mainstream class. However, advisors are interested in crypto and will learn more about it to better serve their clients.

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