While significant allocations toward bitcoin in financial advisors’ client accounts may still be a way off, an increasing number of them are allocating to crypto assets in their personal portfolios, according to Bitwise CIO Matt Hougan.
“A wave of the most powerful people in finance are finally allocating to crypto,” Hougan said in a memo to clients on Tuesday, reflecting on his keynote speech at the Barron’s Advisor 100 Summit in Palm Beach, Florida, on Friday.
The summit is a gathering of the top financial advisors in the U.S., with Hougan invited to speak following the launch of spot Bitcoin BTC
+0.32%
exchange-traded funds, including Bitwise’s BITB product, earlier this year.
Attempting to gauge the room, Hougan kicked off by asking how many people owned bitcoin or another crypto asset in their personal portfolios.
Having attended the summit and asked the same question for the past three years, Hougan said the response was previously in the 10% to 20% range. However, this time, the Bitwise CIO estimated it was more like 70% as “nearly every hand in the room went up.”
“There’s a very sophisticated technical word that economists use for this kind of year-over-year phenomenon: whoa,” Hougan added.
RELATED INDICES
When he followed up by asking how many had allocations to bitcoin in client accounts, very few kept their hands raised, Hougan clarified — unsurprising given many of the advisors work for broker-dealers that are not allowed to buy the spot Bitcoin ETFs yet.
However, in his experience, Hougan said advisors almost always allocate to their personal accounts first, with client allocations typically following six to 12 months later.
‘One of the most powerful signs of the times’
The Bitwise CIO pointed toward several bullish signals in the market, including the Federal Reserve’s recent 50 basis point interest rate cut, the spot Bitcoin ETFs becoming approved by one of the country’s largest wirehouses in Morgan Stanley, and the SEC’s approval of options on BlackRock’s Bitcoin ETF last week. But in his view, the show of hands at Palm Beach was “one of the most powerful signs of the times.”
“Buying a little bit of bitcoin is incredibly powerful for people. A personal connection breeds familiarity. When you hold and track bitcoin in your own portfolio, fear and dismissal tend to give way to curiosity and, eventually, comfort,” Hougan added. “When it spreads from them to their clients, things could get interesting quickly.”
Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.
© 2024 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
