Top Financial Advisors Are Allocating to Crypto: Bitwise CIO Reveals

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Jimmy Aki

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Jimmy Aki

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Jimmy has nearly 10 years of experience as a journalist and writer in the blockchain industry. He has worked with well-known publications such as Bitcoin Magazine, CCN, and Blockonomi, covering news...

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September 23, 2024

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In a keynote speech delivered at the Barron’s Advisor 100 Summit on September 20, Bitwise Chief Investment Officer (CIO) Matt Hougan revealed that top financial advisors are increasingly incorporating cryptocurrency into their personal portfolios.

Increase in Financial Advisors Embracing Crypto Signals Changing Times

In a memo published on September 23, Bitwise CIO Matt Hougan reflected on his keynote speech.

Hougan, making his third consecutive appearance, assessed the audience’s familiarity with cryptocurrency.

In prior years, only 10% to 20% of attendees reported holding crypto in their portfolios, a figure that remained steady last year.

However, this year saw a substantial change, with approximately 70% of attendees confirming they hold Bitcoin or other cryptocurrencies

While this personal adoption of crypto shows promise, Hougan pointed out that many financial advisors are still hesitant to recommend or include these assets in their clients’ investment strategies.

This hesitation stems from restrictions imposed by broker-dealers. Most firms do not yet allow advisors to offer Bitcoin ETFs or other crypto-related products to their clients, with Morgan Stanley being a notable exception, permitting its advisors to present Bitcoin ETFs to their clients.

Hougan highlighted a critical juncture for financial advisors, where growing personal interest in crypto meets institutional resistance.

As more advisors embrace crypto in their own portfolios, the pressure for broker-dealers to support these products in client portfolios will likely intensify.

This signals the potential for digital assets to become an integral part of mainstream financial planning in the future.

Bitwise CIO Believes Several Positive Signs Are Driving Crypto Adoption

The Bitwise CIO memo also detailed a growing interest, alongside several positive signs in the cryptocurrency market, such as the Federal Reserve’s first interest rate cut in four years and the approval of Bitcoin exchange-traded funds (ETFs) by major financial firms.

The Federal Reserve’s recent rate cut suggests a more favorable economic outlook, prompting investors to consider alternative assets such as cryptocurrencies.

However, Hougan argued that the most significant indicator of change is the increasing number of advisors holding Bitcoin in their personal portfolios.

By personally investing in crypto, advisors are becoming more comfortable with the asset, gradually overcoming their initial fears and doubts.

As interest in Bitcoin and other cryptocurrencies rises, it’s likely that more financial advisors will start recommending these assets to their clients.