Crypto Interest Remains High Despite Turbulent 2022
Tough macro conditions and the collapse of FTX and other entities in the crypto industry paved the way for a turbulent year in 2022. Now, that’s not to say all aspects of the industry saw negative results. Ethereum transitioned to a proof-of-stake consensus mechanism, Layer 2 scaling solutions took off, and DeFi blue-chips demonstrated resilience.
Given the crypto setbacks experienced in 2022, financial advisers remain highly engaged in crypto markets, with 15% allocating to client accounts and 90% receiving inbound questions from clients about the space, according to a Bitwise and VettaFi survey.
Needless to say, the high interest from clients is proof that every adviser needs to answer questions about crypto, and the question received most from clients is “Should I consider an investment in cryptocurrency?”
“Advisers and their end clients continue to want to learn more about crypto investments despite the volatility incurred in 2022,” said Todd Rosenbluth, Head of Research for VettaFi. “For those with a long-term focus, interest remains high."
That high interest from clients is a big business opportunity for advisers, and advisers look to benefit from it. More than three-fourths of advisers who currently have an allocation in client accounts plan to maintain or increase that exposure in 2023, according to the survey.
Moreover, crypto equity ETFs were financial advisers’ top crypto investment choice for 2023. The reason is that equity ETF exposure is easier for advisers to allocate to than direct crypto asset holdings. In fact, the survey revealed that 68% of advisers said it is their preferred way to own crypto. Because of that, the advantages of ETFs over traditional mutual funds such as fees, tradability and transparency gained ground with advisers.
"The survey is a reminder that crypto is one of the best business development opportunities in the financial adviser market," said Matt Hougan, Chief Investment Officer for Bitwise Asset Management. "Ninety percent of advisers report fielding questions from clients, and a majority say they have clients who invest in crypto outside the advisory relationship. 2023 is the year to bring those investments in-house."
The Bitwise and VettaFi survey highlighted that interest in crypto assets continues to hold steady and even to build in certain aspects as most advisers have clients who ask about crypto and consider investing in it.
As the turbulence from 2022 calms, crypto remains a compelling investment option and a unique business development opportunity for financial advisers and institutional investors.
Edited by Alex Passett
