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Here’s Why Some Financial Advisors Are Adding Bitcoin To Client Portfolios


A new report (PDF) from Bitwise and ETF Trends has looked into how financial advisors think about Bitcoin and other cryptocurrencies.

Notably, the report indicates that roughly 9% of independent registered investment advisors (RIA) currently allocate a percentage of client funds to crypto assets. According to the report, the rate of crypto investment among independent RIAs is higher than the rates found with financial planners, wirehouse representatives, and broker dealers due to the relative lack of restrictions independent RIAs face in terms of the types of investments they’re able to make on behalf of their clients.

While overall allocation among financial advisors is still low at around 6%, the report indicates a potential doubling or more for this sort of activity in 2020 based on survey responses.

A variety of reasons for potentially adding Bitcoin exposure to client portfolios are provided in the survey, but the fact that the cryptocurrency is largely uncorrelated with other asset classes is the most highly-cited factor for financial advisors.

Why Bitcoin is Attractive to Financial Advisors

According to the report from Bitwise and ETF Trends, 54% of financial advisors view Bitcoin’s lack of correlation to other asset classes as a reason to add the crypto asset (or one of its competitors) to client portfolios.

“That finding aligns with Bitwise’s qualitative view of how the primary narrative surrounding the investment aspects of crypto evolved in 2019,” the report adds. “From our perspective, 2019 saw a significant uptick amongst both the mainstream media and traditional Wall Street analysts in discussing crypto as a ‘safe haven asset’ and a new form of ‘digital gold.’ That messaging appears to have resonated with the financial advisor community.”

To Bitwise’s point, data from the second half of 2019 appears to show that Bitcoin’s role as a digital gold is going from theory to reality. Additionally, one indus...

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