Editor’s Note: With so much market volatility, keep up with the daily news! In just a few minutes, get caught up in our quick recap of today’s top news and expert insights. Sign up here!
(Kitco News) – Financial advisors remain deeply connected to the cryptocurrency market despite the decline in the sector’s value in 2022, according to the findings of the fifth annual Bitwise/VettaFi 2023 Benchmark Survey of Financial Advisor Attitudes Toward Crypto Assets.
Bitwise Asset Management, the world’s leading crypto index fund manager, and VettaFi, a leading data-driven ETF platform, released the results of their annual survey on Wednesday, which showed that 15% of financial advisors said they had invested in crypto in their client accounts over the past year. This value roughly corresponds to the previous year’s result of 16% and is significantly better than the results from 2020 (6%) and 2021 (9%).
Ninety percent of respondents said they have received inbound questions from clients about the asset class. The most common question was, “Should I consider investing in crypto?”
The survey also found that 59% of advisors have clients investing in crypto independently outside of their advisory relationship. This is largely due to a lack of access, as only 29% of advisors said they can buy crypto in client accounts, while the other 71% are prevented from doing so by company policies.
“The survey is a reminder that crypto is one of the top business development opportunities in the market for financial advisors,” said Bitwise Asset Management Chief Investment Officer Matt Hougan.
Among those able to buy crypto for customers, 52% are currently actively allocating on behalf of customers.
The biggest barrier to recommending crypto to their clients has been regulatory uncertainty, with 65% of advisors claiming this is a barrier to greater crypto adoption. “Ongoing debates about asset categorization, regulatory jurisdictions, and tax reporting requirements are both a natural consequence of crypto’s growing presence and a barrier to wider adoption,” the report states.
“Better regulation” was cited by 75% of advisors as a crucial step in improving their confidence in allocating to crypto, up from 55% a year ago.
Overall, the financial advisors surveyed are pessimistic about the crypto market in the short-term but remain optimistic in the long-term. 63% of respondents said they expect the price of BTC to fall in 2023, but 60% believe it will be higher in five years.
The volatility seen in 2022 has done little to dissuade those already invested in crypto, as 78% of advisors currently allocated to client accounts plan to either maintain or increase that exposure in 2023.
“Advisors and their end clients want to continue learning more about crypto investing despite the volatility in 2022,” said Todd Rosenbluth, research director at VettaFi. “For those with a long-term focus, interest remains high.”
When it comes to which products advisors were most interested in in 2023, crypto stock ETFs holding multiple crypto stocks were the top choice (25%), followed by single crypto assets like bitcoin (17% ), diversified crypto asset funds (10%) and individual crypto stocks (4%).
Broken down by area of interest, Bitcoin and Ether received the most attention, with 41% and 20% of advisors respectively selecting them as their areas of interest. Interest in the main sectors of the crypto market was fairly evenly split, with 16% expressing interest in DeFi, 12% in crypto stocks, and 11% in Web3 and Metaverse.
“As the dust settles over the past year and advisors assess the investment landscape for 2023, we see the continued advance of crypto’s transformative potential as a compelling investment option and unique business development opportunity for financial advisors and institutional investors,” the report concluded.
Over 400 financial advisors participated in the survey, including independent registered investment advisors, broker-dealer representatives, financial planners and wirehouse representatives from across the United States.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of the author Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not an invitation to exchange goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article assume no responsibility for any loss and/or damage resulting from the use of this publication.