The recent report by Bitwise and VettaFi reveals that 56% of financial advisors are more likely to invest in crypto this year, with the 2024 US election results pivoting sentiment.
The 2024 surge in crypto prices and increased regulatory clarity have sparked greater interest from clients and advisors alike. In 2024, 96% of advisors fielded client inquiries about crypto, the highest level recorded, up from 88% in 2023.
Additionally, the proportion of advisors allocating crypto in client portfolios doubled year-over-year, rising to 22% in 2024, compared to 11% in 2023. Institutional investors (30%) and Registered Investment Advisors (RIAs) (28%) were the most likely to allocate crypto, followed by wirehouse representatives (24%).
Advisors’ clients are also increasingly taking independent positions in crypto, with 71% investing in crypto independently of their advisors in 2024, up from 59% in 2023. These “held-away” assets represent a growing opportunity for advisors looking to integrate crypto into broader wealth plans.
The report surveyed 430 eligible responses from financial advisors.
The report paints a picture of an industry gaining momentum. Advisors who have yet to allocate crypto are increasingly inclined to do so, with 19% planning to invest in 2025, up from 8% last year.
Meanwhile, 99% of advisors already investing in crypto plan to maintain or increase their exposure.
Political momentum
The 2024 US elections marked a significant turning point for crypto. President-elect Donald Trump’s embrace of digital assets, including a strategic Bitcoin (BTC) reserve proposal, has fueled optimism.
Additionally, pro-crypto candidates secured key victories in Congress, tilting the political landscape in favor of the industry.
The report also highlighted mounting speculation over Senator Cynthia Lummis’ (R-WY) proposal for the US to purchase 1 million Bitcoins over five years, with 45% of advisors believing it will happen.
The report suggests that the US’s potential entry into the Bitcoin reserves race could set off a global trend, with countries like Brazil and Poland already considering similar legislation.
Remaining barriers
Despite growing enthusiasm, challenges remain. Volatility (47%) and regulatory uncertainty (50%) remain the top barriers to advisor adoption. However, regulatory concerns have decreased compared to prior years, reflecting a more favorable outlook under the incoming administration.
65% of advisors still cannot or are unsure whether they can allocate crypto in client accounts, remaining a significant hurdle.
Encouragingly, advisors are increasingly confident in their ability to value crypto assets, with only 31% citing valuation concerns in 2024, down from 42% in 2023. Custody concerns are also easing, with fear of hacks dropping from 38% in 2022 to 24% in 2024.
Shifting strategies
The report also highlighted changing preferences among advisors for crypto investment vehicles. Crypto equity ETFs (25%) remain the most popular choice, as they offer a familiar entry point for advisors hesitant about direct crypto exposure.
Interest in spot crypto ETFs (22%) and diversified crypto index funds (19%) has surged, reflecting a growing appeal of professionally managed options.
The report noted that advisors are exploring more sophisticated strategies, with thematic strategies (26%) and buffered strategies (24%) commanding significant attention. These approaches aim to mitigate crypto’s volatility and deliver differentiated returns.
It added that 67% believe Bitcoin’s price will rise over the next year, up from 52% in 2023. By 2030, 40% expect Bitcoin to trade between $250,000 and $1 million, with 10% projecting it could surpass $1 million.
The report also noted a growing conviction in Bitcoin’s long-term potential as a mainstream asset. A substantial 83% of respondents believe Bitcoin will have a higher market cap than Ethereum (ETH) within five years.