Nasdaq: Financial Advisors Want Bitcoin Allocation

  • A survey of 500 financial advisors found that 72% wanted to invest more in the bitcoin and broader cryptocurrency sector if a bitcoin cash ETF was approved.
  • Respondents are already invested in bitcoin or other cryptocurrencies, or are strongly considering an allocation to the asset class.
  • Less than 9% of advisors are confident in their ability to expertly advise clients within the asset class, indicating an educational gap between traditional finance and an emerging monetary system.

In a Nasdaq survey of 500 financial advisors already assigned or considering an allocation to bitcoin and other cryptocurrency-based products, 72% would invest more in the space if an exchange-traded fund (ETF) were approved , according to a press release sent to Bitcoin Magazine detailing the results.

“For the past decade, financial advisors have focused on moving assets into index funds,” said Jake Rapaport, head of digital asset index research for Nasdaq, according to the statement. “As they incorporate digital assets into their investment strategies, they are expressing strong interest in a similar vehicle that can provide broad asset class exposure for their clients.”

Financial advisors, both retail and institutional, are increasingly interested in Bitcoin and other cryptocurrencies. While this is true, it’s important to keep the right perspective in mind as these conversations evolve.

According to a January survey from Bitwise, one of the world’s largest cryptocurrency managers, financial professionals allocating to bitcoin and other products rose to 15% from 9% the previous year. These numbers lend themselves to a responsible expectation of adoption for finance professionals as they show that we still have a long way to go. However, continuing to look at those already allocated space still offers immense value.

The Nasdaq survey found that 86% of advisors who pre-allocated to bitcoin or other cryptocurrencies plan to increase allocation in the next 12 months, while none of them ‘intends to subtract from their wallets. From the same sample class, 50% are already using bitcoin-based ETF futures and 28% intend to do so within 12 months.

As this survey only represents a small portion of financial advisors, there’s no denying that professionals entering the space quickly discern value for their investors and hold on to it for the long term. Despite the favorable terms understood by financial advisors allocating to bitcoin and other cryptocurrencies, there is still much doubt about the hope that a spot ETF will be approved this year.

While 7% of respondents are unsure whether the outlook for spot ETF will be successful in 2023, 38% believe it is likely to succeed, 31% expect failure, and 24% of respondents took a neutral position.

The lack of confidence for a spot ETF endorsement should serve as a signal to those unallocated to bitcoin, as demand for those already investing is only increasing by the day, likely looking to take the advantages. first-mover versus slower-to-adopt.

Among those surveyed, registered investment advisers (RIAs) make up 34% of the user base, while 19% are owned by independent brokers and 17% by agency advisers. Only 7% indicated that environment, social and governance (ESG) were important criteria for investment strategies, 10% felt well informed about bitcoin and other cryptocurrencies, and only 9% felt confident in their counseling abilities. An overwhelming majority (98%) expressed a desire to further their education in the broader cryptocurrency space.

It is important to remember that only 9% of respondents feel confident in their ability to advise bitcoin and other cryptocurrencies. As noted above, this is a smaller percentage of the overall financial advice ecosystem, but among those involved, less than 1 in 10 advisers feel they know what they are talking about. fact.

“Crypto inflows through advisor channels show no signs of stopping, even as advisors grapple with compliance considerations and seek guidance in educational materials from others in the industry, including asset managers. ‘assets and index providers,’ Rapaport said. “We expect ESG and crypto considerations to converge as investors continue to direct assets towards both.”

As traditional finance tries to fit into an emerging system, financial advisors still have a lot to learn. The education gap, however, does not appear to be slowing down attempts to cash in on gains from the bitcoin ecosystem.

“The vast majority of advisors we surveyed plan to either start allocating to crypto or increase their existing crypto allocation,” Rapaport said. “As demand continues to grow, advisors will be looking for an institutional solution to the crypto question that now dominates client conversations.”