96% of Advisors Got Investor Questions About Crypto Last Year. Why They Still Urge Caution | Global News Avenue

Last year, as Bitcoin (Bitcoin USD) hit multiple all-time highs, but financial advisors still urge caution, no matter how tempting an investment looks.

Ninety-six percent consultant The survey, conducted by crypto asset manager Bitwise and analytics firm VettaFi, said they had received questions about cryptocurrencies over the past year. This is up from 88% last year. Number of advisors allocated funds Cryptocurrency Investment The customer mix has also doubled in the last year.

Investors scared of Bitcoin rally?

Newly launched Bitcoin demand in early 2024 Spot Bitcoin Exchange Traded Funds (ETFs) because Halving event Pushing Bitcoin prices higher.

Later this year, Bitcoin hit an all-time high of over $108,000 December U.S. presidential election results expected More favorable cryptocurrency regulation From a supportive Congress and the incoming Trump administration.

Andrew Cook said: “Anytime any asset, any asset, experiences positive returns like the one the Bitcoin ETF has experienced since its launch, it creates a situation of customer fear of missing out (FOMO), especially when it When it’s the shiny new product.” Berman McAleer Partner and Director of Investment Management.

And this FOMO phenomenon isn’t limited to retail investors. Nearly half of the consultants surveyed had worked for institutional investors such as pension funds. Registered Investment Advisor (RIA)and wirehouses said they have exposure to cryptocurrencies in their personal portfolios.

Why Investors May Want to Curb Their Cryptocurrency Enthusiasm

While financial advisors have noticed an increase in client questions about cryptocurrencies, not everyone is willing to invest in digital assets. Many consultants still Be cautious about advice Clients include cryptocurrencies in their investment portfolios.

During the investigation, Only 14% of planners said they currently allocate funds to cryptocurrencies in client accounts. For other types of advisors such as RIAs and wire house consultant.

Experts generally recommend keeping distribute The proportion of cryptocurrencies is below 10%, even below 3%.

Stephan Shipe, a certified financial planner (CFP) and investment advisor at Scholar Financial Advising, said many of the questions he receives are from clients who have already invested in cryptocurrencies. “As the business has grown, it has become an important part of their (customers’) portfolios,” Shipp said.

He advises these clients to reduce their holdings so they don’t make up a large portion of the portfolio. high risk assets.

Bitcoin is also an extremely volatile asset, often experiencing large price swings. Over the past three months, for example, it surged from trading near $67,000 the day before the U.S. election in November to $108,000 in early December before briefly trading Under $90,000 earlier this week.

That’s why Justin Waring, executive director and senior aggregate wealth strategist at UBS, is cautious about cryptocurrencies and advises clients to only invest money they can afford to lose.

“As long as the customer really wants to reach potential benefitwe strongly recommend limiting that position and often (recommending) putting it into a different account, such as a recreational account,” Waring said.

he thinks Cryptocurrency ETFs is the least risky way to invest in cryptocurrencies. He noted that with direct investing, some people risk losing their entire investment if they forget their password. crypto wallet.