A recent report from Bitwise and VettaFi show that 56% of financial advisors are more likely to invest in crypto this year, with the 2024 US election results shifting sentiment.
The rise in crypto prices in 2024 and increased regulatory clarity have led to increased interest from both clients and advisors. In 2024, 96% of advisors answered client questions about crypto, the highest level recorded, compared to 88% in 2023.
Additionally, the share of advisors allocating cryptocurrencies to clients’ portfolios doubled year-over-year, reaching 22% in 2024, up from 11% in 2023. Institutional investors (30%) and registered investment advisors (RIAs) (28%) were most likely to commit crypto, followed by wirehouse representatives (24%).
Advisor clients are also increasingly taking independent positions in crypto, with 71% investing in crypto independently of their advisors by 2024, up from 59% in 2023. These “withheld” assets represent a growing opportunity for advisors looking to integrate crypto into their crypto activities. broader wealth plans.
The report examined 430 eligible responses from financial advisors.
The report paints a picture of a sector that is gaining momentum. Advisors who have not yet committed to crypto are increasingly likely to do so, with 19% planning to invest in 2025, compared to 8% last year.
Meanwhile, 99% of advisors already investing in crypto plan to maintain or increase their exposure.
Political momentum
The 2024 US elections marked a major turning point for crypto. President-elect Donald Trump’s embrace of digital assets, including a strategic Bitcoin (BTC) reserve proposal, has fueled optimism.
Additionally, pro-crypto candidates scored major victories in Congress, tilting the political landscape in favor of the industry.
The report also highlighted growing speculation about Senator Cynthia Lummis’s (R-WY) proposal for the US to purchase 1 million Bitcoins over five years, with 45% of advisors believing this will happen.
The report suggests that the US’s potential entry into the Bitcoin reserve race could spark a global trend, with countries such as Brazil and Poland already considering similar legislation.
Remaining barriers
Despite the growing enthusiasm, challenges remain. Volatility (47%) and regulatory uncertainty (50%) remain the top barriers to advisor adoption. However, regulatory concerns have diminished compared to previous years, reflecting a more favorable outlook under the new government.
65% of advisors are still unable or unsure if they can allocate crypto into client accounts, which remains a significant hurdle.
Encouragingly, advisors are increasingly confident in their ability to value crypto assets, with only 31% concerned about valuation in 2024, down from 42% in 2023. Custody concerns are also waning, with fears for hacks has fallen from 38% in 2022 to 24%. in 2024.
Shifting strategies
The report also highlighted advisors’ changing preferences for crypto investment vehicles. Crypto stock ETFs (25%) remain the most popular choice, as they provide a trusted entry point for advisors hesitant about direct exposure to crypto.
Interest in spot crypto ETFs (22%) and diversified crypto index funds (19%) has surged, reflecting a growing appeal of professionally managed options.
The report notes that advisors are exploring more advanced strategies, with thematic strategies (26%) and buffered strategies (24%) requiring significant attention. These approaches aim to reduce crypto volatility and achieve differentiated returns.
It added that 67% believe the price of Bitcoin will rise in the coming year, up from 52% in 2023. By 2030, 40% expect Bitcoin to trade between $250,000 and $1 million, while 10% expect the price to reach $1 million could exceed.
The report also found growing belief in Bitcoin’s long-term potential as a mainstream asset. A significant 83% of respondents believe that Bitcoin will have a higher market capitalization than Ethereum (ETH) within five years.
