Bitwise Study: crypto still in infant stage

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Bitwise Wealth Management, a leading supplier of crypto-index funds and ETF trends, is in the headlines today following the announcement of a report showing how financial advisors across the United States feel about crypto.

In the minds of many, the results of the study validate the argument that cryptocurrencies have gone mainstream. The study in question showed that there was a 50% growth in the number of Crypto Advisors relative to last year’s estimates.

Although on the surface it may seem big, the fact is that with just 6.3 per cent of the surveyed advisors making crypto-allocations last year, out of 1,000 respondents, only 94 have made crypto-allocations this year. This was well emphasised by Matt Hougan, Chief Investment Officer at Bitwise, who said:

“The survey shows it’s still early days for crypto, with less than 10% of advisors allocating today. At the same time, adoption and interest are growing: The survey suggests the number of advisors allocating could double or more in the year ahead.”

Furthermore, the study also showed that over 81% of all financial advisors reported receiving crypto queries from their clients in 2020, up from 76% in 2019.

Source: Bitwise/ETF Trends 2021 Benchmark Survey Of Financial Advisor Attitudes Toward Cryptoassets.

As far as the advisors currently allocated to crypto is concerned, 54 per cent of them did so because of crypto’s status as an asset promising ‘uncorrelated returns.’ On the opposite, 25 per cent of these advisors did so for inflation-related purposes.

What does this mean to you? Ok, that’s a big change in financial advisors’ thoughts about crypto. In fact, back in 2019, 14 percent of the advisors surveyed thought that the price of Bitcoin would plunge to zero. By comparison, 15 percent now expect Bitcoin’s price to reach $100,000 in five years.

Source: Bitwise/ETF Trends 2021 Benchmark Survey Of Financial Advisor Attitudes Toward Cryptoassets.

Bitcoin had a wild week, with the blockchain climbing to $41,914 before crashing to a local low of $30,305, all in just a few days. Although the survey indicates that retail participation has been increasing, some of the factors that have stayed stagnant over the years include the need for tighter supervision and lower uncertainty of typical retail investors in order to keep sizeable crypto allocations comfortable.

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