Institutional adoption of cryptocurrencies remains an uphill battle. Despite the challenges of 2022, it's clear that this asset class can no longer be ignored.
Financial advisors in the U.S. play a pivotal role in shaping the investment landscape, controlling over $20 trillion in wealth—approximately half of all U.S. assets. Their capital allocation decisions are critical for emerging asset classes like cryptocurrencies.
The Bitwise/VettaFi Annual Survey, now in its fifth year, tracks the evolution of financial advisors' understanding and attitudes toward crypto. This year's findings reveal enduring interest amid market turbulence, with advisors and clients maintaining near-record allocations. Key barriers include limited access, regulatory uncertainty, and volatility.
Here are six major insights from the 2023 Bitwise/VettaFi Benchmark Survey of Financial Advisors:
1. Crypto Allocations Remain Stable Despite Market Volatility
Despite 2022's downturn, 15% of advisors reported allocating crypto in client accounts (vs. 16% in 2022 and 9% in 2021). Notably, 52% of advisors with access to crypto products currently allocate, underscoring the importance of platform availability.
Key Question:
👉 Are you currently allocating crypto in client accounts?
2. Advisors Who Invest Tend to Hold (or Increase) Exposure
- 78% of advisors with crypto allocations plan to maintain or increase exposure in 2023.
- 74% without allocations remain hesitant or undecided.
This divergence suggests that hands-on experience fosters long-term confidence.
3. Client Interest Stays Strong
- 90% of advisors fielded crypto questions from clients in 2022 (vs. 94% in 2021).
- Top client question: "Should I invest in crypto?" (56%).
4. Clients Self-Direct Crypto Investments
- 59% of clients invested in crypto outside advisory relationships (down from 68% in 2021).
- 75% used centralized platforms (e.g., Coinbase), while 41% used private wallets.
5. Short-Term Bearish, Long-Term Bullish
- Only 37% expect Bitcoin to rise in the next year.
- 60% believe Bitcoin will gain value over five years.
6. Regulatory Uncertainty Tops Concerns
- 65% cite unclear regulations as the primary barrier (up from 60% in 2021).
- Fewer advisors now cite "lack of understanding" (25%) as a hurdle.
FAQs
Q: Why are financial advisors cautious about crypto?
A: Concerns include regulatory gaps, volatility, and 2022’s high-profile collapses (e.g., FTX).
Q: How do clients typically invest in crypto?
A: Most use centralized exchanges (75%) or self-custody wallets (41%).
Q: What’s the long-term outlook for Bitcoin?
A: 60% of advisors believe Bitcoin’s price will rise over five years.
Conclusion
Despite 2022’s upheavals, crypto interest persists among advisors and clients. Barriers like regulation and volatility remain, but allocations have stabilized. For further analysis, explore the full Bitwise/VettaFi survey.
Methodology: Survey conducted Nov 25, 2022–Jan 6, 2023, with a cross-section of U.S. financial advisors.
👉 Dive deeper into crypto trends for 2023
Disclosures: Crypto investments carry risk. This is not investment advice. Past performance ≠ future results.