Crypto enthusiasts regard Bitcoin as one of the best investments they can make, but financial advisers have always been skeptical about its potential. They have had quite genuine reasons to be skeptical; the volatile nature of cryptocurrencies makes them very risky because not only can they help you make fortunes within seconds, they can break them just as easily.
However, things appear to be changing now, as crypto has firmly established itself as part of the financial markets and does not seem to be going anywhere. Therefore, financial advisers, no matter how reluctant they may have been, are now looking into Bitcoin and other crypto-assets. A number of investors who do not want to stick to traditional stocks anymore are taking a look at the volatile crypto space.
Interest in Crypto Investments
Recent reports indicate that 49% of advisors have revealed that they have seen an influx of investors asking questions about crypto investments since the start of the year. 2 years ago, this had been about 17%, when the crypto space had still not evolved as much as it has now with the introduction of NFTs (non-fungible tokens).
However, it is also important to note that it has now become a two-way street because it is not just investors who are taking an interest in crypto, but advisors themselves are dipping their toes in the market. Statistics show that more than 26% of these advisors are also dabbling in the market and want to continue with this venture for the next year at least.
Crypto investments were recommended by nearly 14% of the financial advisers, which is a substantial jump from 1% between 2019 and 2020. This increasing interest has also helped in making room for more job opportunities. For instance, crypto-assets management services are now being offered to financial advisers by companies like Onramp Invest.
The chief executive of Onramp Invest, Tyrone Ross stated that people have now accepted that crypto is not going anywhere. The current market trends indicate that it is time for these advisers to adapt. Traditionally, financial advisers have not been very savvy when it comes to tech-related investments, but now they have to upskill themselves because of their interest in the market.
The Investment Trend
Even though cryptocurrencies appear to have high demand, it does not mean that financial advisors have thrown caution to the wind. They are still being careful and only investing 1% to 2% of their portfolio to cryptocurrencies. The CEO of Onramp Invest stated that if a financial adviser is committed to their crypto strategy and wants a bigger piece of the pie, they invest between 3% and 5%, but it has not gone beyond that for now.
Financial advisers have found themselves under a great deal of pressure from investors who are interested in not just investing in traditional assets, but digital ones as well. Therefore, advisers are now working on assessing the risk tolerance of their clients in order to make appropriate recommendations.