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At this writing, bitcoin resides around $21,500, meaning it would need to roughly triple to regain its all-time highs. Plenty of other cryptocurrencies are performing more poorly and the market for non-fungible tokens (NFTs), well let’s just say it’s not what it once was.
Still, bitcoin, blockchain and related fare remain interesting to clients and that’s true across a variety of age and demographic lines. While there are plenty of digital assets that won’t be around in a few years, the fact is this is an investable asset class and one that’s compelling to clients, meaning it’s on advisors to provide education and guidance in what’s still nascent territory.
For those on the fence about crypto and digital assets, it’s best to put those personal feelings because some of the biggest names in asset management and fund issuance are entering the space. All of them aren’t wrong.
Additional data points suggest adoption rates – a critical element in the bitcoin investment thesis –is poised to soar through the end of this decade and beyond, potentially providing ballast for the broader digital assets complex.
Understanding Perspectives on Digital Assets
Data confirm blockchain and digital assets are gold mines of potential client engagement.
“Around 80% of survey respondents claimed to have little to no understanding of blockchain technology and cryptocurrencies,” notes Global X’s Mayuranki De.
Earlier this month, the exchange traded funds issuer “surveyed 310 individuals in the U.S. on their attitudes towards and familiarity with the digital assets space. The purpose of the survey was to see how much the average investor knew about digital assets and their willingness to invest within the sector. Topics ranged from appealing aspects of blockchain technology to concerns hindering widespread adoption of cryptocurrencies.”
Moreover, data confirm more advisors see benefits in allocating some portion of client portfolios to crypto.
In fact, a new Nasdaq survey of 500 financial advisors who are currently or mulling crypto exposure on behalf of clients believe the ideal crypto allocation is 6%. That’s mostly inline with or just slightly below traditional rules pertaining to commodities exposure.
Other data points confirm there’s ample interest in digital assets and that there’s plenty of room for growth.
“Although nearly half of surveyed Americans have never invested in a cryptocurrency, over 40% increased investment exposure over the past year,” adds De.
Of course, there are concerns. The Global X survey reveals six in 10 of those polled say security is one reason they’re skittish about investing in digital assets. Perhaps on a related note, a third of those surveyed said they prefer blockchain over direct allocations to specific crypto assets.
What’s Next for Digital Asset Adoption
To date, crypto penetration among advisors is decent, but there’s ample room for growth and that could be facilitated by easing of compliance protocols that forbid some advisors from allocating to digital assets. There are other reasons advisors need to acknowledge this space.
“When it comes to digital assets portfolio allocation, 70% of surveyed Americans feel comfortable investing in at least some cryptocurrencies,” concludes Global X’s De.
The point: This year’s struggles cannot be ignored, but the reality is digital assets aren’t going anywhere. The phenomenon will continue growing and it’s on advisors to properly acknowledge and capitalize on that trend.
Related: How High Can Ethereum Go?