Why Top US Financial Advisors Are Investing in Bitcoin in 2024?

At Barron’s Advisor 100 Summit, a noticeable shift in sentiment toward Bitcoin was clear among America’s top financial advisors. Matt Hougan, Chief Investment Officer at Bitwise, conveyed pivotal insights, illustrating the industry’s stance on cryptocurrency, particularly Bitcoin.

Hougan’s speech highlighted an engaging session that indicated a substantial rise in personal investments in Bitcoin by financial advisors.

Bitcoin is Gradually Becoming Investors’ Favorite

Compared to a few years ago, when only about 10-20% of attendees had exposure to cryptocurrencies, this year showed a dramatic increase. Notably, around 70% indicated they personally owned crypto assets.

“There’s a very sophisticated technical word that economists use for this kind of year-over-year phenomenon: whoa,” Hougan wrote.

Read more: Who Owns the Most Bitcoin in 2024?

This change is significant; it reflects a deepening interest in cryptocurrencies within professional finance circles. Despite this personal enthusiasm, actual client allocations in Bitcoin are still infrequent. Many advisors face regulatory and institutional barriers that prevent them from including Bitcoin exchange-traded funds (ETFs) in client portfolios.

“Many of these advisors work for broker-dealers that do not even allow them to buy Bitcoin ETFs yet. But that will come. One thing I’ve learned from working at Bitwise for seven years is that advisors virtually always allocate first in their personal accounts. Client allocations typically follow 6 to 12 months later,” Hougan stated.

Moreover, other bullish indicators include recent economic developments such as the Federal Reserve’s rate cut and the SEC’s approval of options on Bitcoin ETFs. These developments, along with the direct observations from the summit, highlight a growing confidence among financial professionals in the viability of Bitcoin as an investment asset.

The spike in advisors’ personal ownership of Bitcoin aligns with the cryptocurrency’s performance. Bitcoin has surged over 50% year-to-date, trading around $64,000, reflecting demand and heightened investor interest.

The rising appeal of Bitcoin and Bitcoin ETFs also extends to institutional investors. According to analyst Eric Balchunas, over 1,000 institutional investors now hold Bitcoin ETFs on their balance sheets. Notably, the iShares Bitcoin Trust (IBIT) by BlackRock has 661 institutional holders, with 20% of its shares held by institutions and large advisors.

In addition, there has been a significant shift among the top US hedge funds, with 60% now holding Bitcoin ETFs, a sharp increase from earlier in the year. Firms such as Citadel Securities, Millennium Management, and Fortress Investment are increasing their stakes, emphasizing solid institutional backing for Bitcoin.

Eric Balchunas, a senior analyst at Bloomberg, highlighted the extraordinary growth of Bitcoin ETFs. He predicts a potential doubling of institutional involvement next year. Furthermore, the broader acceptance of Bitcoin ETFs among registered investment advisors indicates a more widespread institutional trust in BTC’s value.