Growing Interest in Crypto Among Financial Advisors

While significant allocations toward bitcoin in client accounts may still be a way off, an increasing number of financial advisors are allocating to crypto assets in their personal portfolios, according to Bitwise CIO Matt Hougan.

“A wave of the most powerful people in finance are finally allocating to crypto,” Hougan mentioned in a memo to clients, reflecting on his keynote speech at the Barron’s Advisor 100 Summit in Palm Beach, Florida.

The summit is a gathering of top financial advisors in the U.S., where Hougan spoke following the launch of spot Bitcoin exchange-traded funds, including Bitwise’s BITB product, earlier this year.

Survey Results

To gauge the room, Hougan asked how many attendees owned bitcoin or another crypto asset in their personal portfolios. Historically, the response ranged from 10% to 20%. However, this year, Hougan estimated around 70% of attendees raised their hands.

“There’s a very sophisticated technical word that economists use for this kind of year-over-year phenomenon: whoa,” Hougan added.

When he inquired about allocations to bitcoin in client accounts, few hands remained up, unsurprisingly, given many advisors work for broker-dealers not allowed to buy the spot Bitcoin ETFs yet. However, Hougan noted that advisors typically allocate to their personal accounts first, with client allocations following six to 12 months later.

Positive Market Signals

Hougan highlighted several bullish market signals, including the Federal Reserve’s recent 50 basis point interest rate cut, approval of spot Bitcoin ETFs by major wirehouses like Morgan Stanley, and the SEC’s recent approval of options on BlackRock’s Bitcoin ETF. He considers the show of hands at the summit as “one of the most powerful signs of the times.”

“Buying a little bit of bitcoin is incredibly powerful for people. A personal connection breeds familiarity. When you hold and track bitcoin in your own portfolio, fear and dismissal tend to give way to curiosity and, eventually, comfort,” Hougan stated. “When it spreads from them to their clients, things could get interesting quickly.”