Financial Advisors Say They’re Not Quitting Crypto: Survey

ETFs are preferred vehicle for giving clients exposure to digital currencies, Bitwise says.

After a year marked by crashes, collapses, bankruptcies and arrests, one might think financial advisors would steer clients away from cryptocurrencies. 

Not so fast, according to a survey that found 60% of financial advisors are long-term bullish on crypto, with exchange-traded funds being the preferred way to invest. 

The survey from San Francisco-based Bitwise Asset Management Inc., issuer of the Bitwise Crypto Industry Innovators ETF (BITQ), found the portion of financial advisors buying crypto for client accounts last year was about unchanged, at 15%, compared with 16% the year before.  

Even after bitcoin’s 65% crash last year, just over three-quarters of advisors currently holding crypto said they will boost their investments or stay at current levels. 

“Financial advisors aren’t moving away from crypto,” Bitwise Chief Investment Officer Matt Hougan said in an interview. 

The long-term view—cycles of peaks and valleys with each valley floor higher than the previous—appears to have convinced financial advisors that digital currencies should remain in clients’ portfolios. While bitcoin collapsed from more than $64,000 in November 2021 to less than $16,000 one year later, it was still way ahead of the 2018 collapse when it dropped to around $3,200. 

“Crypto has had its ups and downs, but if you pan out over time, it’s been making significant strides,” Hougan noted. 

Still, advisors are hedging their enthusiasm by recommending clients invest only 1%-5% of their assets in crypto, the survey of 491 advisors found. “There’s such a thing as too much crypto,” he added. 

Crypto ETFs have seen a resurgence of interest in the past three months, with the five top funds all seeing positive inflows of investor cash, according to ETF.com data. The Simplify Bitcoin Strategy PLUS Income ETF (MAXI) has added $10.5 million over the past three months, more than doubling its assets under management while its price gained 16%. 

The biggest crypto fund, the $776.1 million ProShares Bitcoin Strategy ETF (BITO), has brought in $3.3 million in new money over the past three months, while its price has surged 21%. 

Hougan expects more volatility this year in crypto ETFs, with prices overall still higher than where the year began. 

“We don’t think it will be a straight line up” this year, he said. Still, “we’re entering a new bull market, a multiyear bull market.” 

Contact Ron Day at [email protected]