70% Of Financial Advisors Converted To Bitcoin - When Will Their Clients Follow?

The world of traditional finance (TradFi) is undergoing a transformation, shaken by the crypto wave that shows no signs of weakening. Recently, a mix of panic and fascination has swept through the higher echelons, as financial players rapidly take positions. The adoption of digital assets like Bitcoin, once reserved for tech-savvy pioneers, is quickly spreading to the most influential financial advisors. The crypto tsunami is hitting hard, and the first cracks are appearing in the citadel of traditional finance.

Bitcoin invades the personal portfolios of financial advisors

At a recent financial advisors summit in the United States, two months ahead of the Bitcoin Conference 2024 in Nashville, a surprising event left a mark. Matt Hougan, CIO of Bitwise asked a simple question: “Who owns Bitcoin in their personal portfolio?“

Two years ago, barely 20% of the hands went up timidly. But this year, more than 70% of advisors present raised their hands, revealing a massive and accelerated adoption of Bitcoin. This phenomenon is not insignificant.

Financial advisors now seem convinced by the solidity and appeal of the king of digital assets. However, paradoxically, few of them are yet integrating it into their clients’ portfolios.

The reason? Large financial institutions remain hesitant and restrictions are still numerous, but this will not last. Hougan reminds us that these professionals often test on themselves first before offering diversification to their clientele.

• In 2022, only 20% of advisors owned Bitcoin;
• In 2023, the figure rose to 70%;
• Crypto funds will follow in client portfolios within 6 to 12 months.

This sudden enthusiasm, encouraged by the recent lower interest rates from the Fed and the approval of Bitcoin ETFs, shows that institutions are starting to see this asset, once considered volatile and risky, in a different light.

The crypto market conquers wealthy clients

The next step will be the generalization of cryptos in clients’ portfolios. “The whales of finance are starting to jump in“, Hougan jokes. And when the biggest fish in the financial sector dive into the crypto pool, the ripples can become devastating for traditional markets.

In a few months, it will be common to see these advisors offering Bitcoin or other cryptos to wealthy clients.

This gradual adoption is not without risk. Indeed, cryptos, and in particular Bitcoin (BTC), still suffer from significant fluctuations. Between market volatility and still uncertain regulations, investors must prepare for potential waves of instability.

Moreover, the risks of hacking are indeed present and the security of digital assets remains a major challenge. The crypto market is still fragile and lightly regulated, making transactions and fund protection uncertain, especially in the event of a flash crash.

Despite this, interest remains strong, and financial advisors anticipate a democratization of cryptos among their clients. For the most optimistic, Bitcoin could even become a store of value in the long term, comparable to gold, suggests the New York Fed.

The time has come for these traditional finance players to embrace the digital revolution while keeping a close eye on market movements.

The great leap of institutional investors into crypto is encouraging, but the potential monopoly of these players could stifle supply. The specter of a Bitcoin shortage looms.