Bitwise CIO: More financial advisors are “allocating to crypto”

• Only 10% to 20% of financial advisors admitted to owning crypto in their portfolios
• Now, roughly, 70% indicated they did
• The approval of Bitcoin ETFs and the Fed’s rate cut are bullish signals that may have changed that

In a client memo, Bitwise’s CIO said that a “wave of the most powerful people in finance are finally allocating to crypto.”

Matt Hougan was reflecting on a keynote speech he’d given at the Barron’s Advisor 100 Summit, where the top financial advisors in the US meet, in Palm Beach, Florida.

Despite Hougan having spoken at the event twice before, he states this was the first time he’d taken to the main stage thanks to the approval of Bitcoin exchange-traded funds (ETFs) earlier this year.

To better understand his audience, Hougan asked them to raise their hands if they owned Bitcoin or another crypto asset in their portfolio. At the last two events, Hougan states that around 10% to 20% of the people in the room raised their hands.

“This year, nearly every hand in the room went up,” he wrote. “I don’t have an exact count, but I’d estimate at least 70% of the advisors in the room raised their hands.”

Following this, he asked if any of them had Bitcoin in client portfolios, with very few raising their hands. According to Hougan, this is expected as many advisors work for broker-dealers that don’t “allow them to buy Bitcoin ETFs yet.”

In Hougan’s opinion, financial advisors always allocate first in their portfolios and “client allocations typically follow six to 12 months later.”

Bullish trends

A change in how financial advisors view crypto can be pointed to several factors, according to Hougan.

These include the US Federal Reserve’s decision to cut interest rates by 50 basis points, spot Bitcoin ETFs being approved by Morgan Stanley, and the US Securities and Exchange Commission’s (SEC) options approval of Blackrock’s Bitcoin ETF.

However, despite bullish trends, Hougan argues that the “show of hands in Palm Beach was one of the most powerful signs of the times.”

“A wave of the most powerful people in finance are finally allocating to crypto,” he said. “When it spreads from them to their clients, things could get interesting quickly.”

Productive year

Hougan’s memo comes after a busy year for Bitwise. Following the approval of Bitcoin ETFs, Bitwise and VanEck promised to donate 10% of their profits to Bitcoin’s development.

In March, the asset management company, filed an S-1 form with the SEC, applying for an Ethereum ETF, which was approved in July.

In June, Hougan stated that Ethereum ETFs would attract $15 billion in net flows in their first 18 months. With so many moving pieces this year, aiming to help advance the crypto space, it’s no wonder an increasing number of financial advisors admitted to owning crypto.