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Four weekly declines in the last five shouldn’t be ignored, but nor should the fact that since the start of 2024, bitcoin is beating stocks by a substantial margin.
Yes, the cryptocurrency space at large remains not for the faint of heart and arguably fewer 10% (probably less) of the 9,960 digital tokens currently on the market aren’t credible assets and have not utility. Bitcoin is on the “useful” side of the ledger along with a handful of others. The largest cryptocurrency’s rising utility, increasing status as a store of value and credible portfolio addition are among the reasons that more advisors are embracing it.
The spot bitcoin exchange traded funds that launched in the U.S. in January certainly helped the advisor adoption. Just look at second quarter 13F filing season, which revealed an increasing number of wealth management firms adding to and establishing positions in spot bitcoin ETFs. Other data points confirm widening advisor adoption of bitcoin.
A June survey of advisors by the Digital Assets Council of Financial Professionals (DACFP), which was sponsored by Franklin Templeton – a spot bitcoin ETF issuer – revealed an array of compelling statistics about advisor adoption of bitcoin.
Experienced Advisors, Affluent Clients Like Bitcoin
The survey queried 584 advisors of whom more than two-thirds are independent who primarily serve clients with assets of $500,000 to $3.5 million. That indicates some affluent clients are increasingly comfortable with bitcoin. Perhaps equally important is the point that experienced advisors are gravitating to the king of cryptocurrencies.
“Nearly 9 in 10 (85%) respondents have more than 10 years of experience in the financial services industry; 62% have 20+ years of experience,” according to the survey. “65% of them mostly serve clients with $500K to $3.5M in assets, while 9% predominantly serve clients whose assets are in excess of $3.5 million, and 36% of the advisors surveyed manage more than $100 million.”
Of the advisors polled by the DACFP, 34% said 10% to 49% of their clients have some crypto exposure. Another 15% put that number at 50% to 100%. The spot bitcoin ETFs are playing a role in driving those percentages to the upside.
“40% of advisors recommend crypto to at least half of their clients. The number of advisors recommending crypto to all clients nearly doubled, from 8% in Q1 to 13% in Q2. The availability of spot bitcoin ETPs is widely regarded as the reason for this sharp increase in advisor engagement,” adds the DACFP.
How Much Advisors Are Allocating to Bitcoin
It’s unlikely a day will ever come when either the 60 or the 40 in a 60/40 portfolio is dramatically altered in favor of bitcoin, but there’s confirmation that advisors see merit in its inclusion in portfolios – in some cases up to 5%.
“Among advisors who recommend crypto, the most commonly recommended allocation is 2% (24% of advisors). Another 20% recommend 1%, 11% recommend 3% and 22% recommend 5%. Another 6% recommend allocations of 10% to 14% and 2.5% recommend allocation of more than 15%,” according to the DACFP poll.
Overall, 91% of advisors plan to recommend a bitcoin allocation of 1% to 5% to their clients with 73% saying that recommendation will be at least 2% to 5%.
Related: Advisors Should Engage in Crypto Conversations With Clients