Trump has financial advisers changing their tune on crypto
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The attitudes of financial advisers toward the crypto asset class are changing fast.
The big picture: More than half of FAs in a recent survey say the presidential election has made them more likely to invest in crypto. This time last year, in a survey from the same folks, hardly any advisers believed bitcoin ETFs would even be approved this year.
Zoom in: The survey of 400 advisers was issued by Bitwise, a crypto index fund manager that offers BITB, one of the top 5 bitcoin exchange-traded funds.
- As the firm continues to push the ETF as an investment vehicle, it conducted the survey with VettaFi to see where advisers stood.
- 96% of them said they have gotten questions about crypto.
- Nearly all (99%) of those who have made allocations for clients plan to hold on or increase it.
The intrigue: Most advisers still can't recommend bitcoin ETFs to their clients, because they work in-house for one of the big investment firms that haven't officially sanctioned any bitcoin funds yet.
- This is not that unusual, Matt Hougan, Bitwise's chief investment officer, tells Axios. A lot of times the big guys like to wait a year or so before recommending a new exchange-traded product.
Yes, but: He also noted that they tend to make an exception for a hot ETF launch, and the bitcoin ETFs have been the hottest. So it is a little strange.
- Morgan Stanley, for one, reportedly allows its advisers to recommend BlackRock and Fidelity's bitcoin ETFs to certain clients.
What he's saying: Hougan doesn't believe the early days are over for bitcoin as an investment until its market cap trumps that of gold.
- With gold's market cap at $18 trillion against bitcoin's nearly $2 trillion, that suggests a lot more room to run.
Friction point: Hougan said we've gone through four years of an administration hostile to cryptocurrency, with an investment regulator who takes an especially dim view.
- That was likely to make the big firms nervous. When and if Paul Atkins gets seated in the SEC, that should be enormously encouraging to the big firms putting bitcoin ETFs on their approved lists.
What we're watching: How bad the next bear market will be.
- Every contraction in crypto has seen an 80%-90% drop in bitcoin price, but, as we've said, it seems like the ETF era could soften that next drop.
- "I think it will be shallower and that it will come back faster and that will mean something is different," Hougan concurred.
The bottom line: "The reality is 95% of the world still doesn't own bitcoin, and the vast majority of institutional investors still don't own bitcoin," Hougan said. "Until that changes, it's still early."
