Bitcoin and crypto-assets on the radar of investment advisers

Credit: Pixabay – Eivind Pedersen

Invest in crypto assets like Bitcoin presents a risk due to their volatility. Nevertheless, a growing number of independent investment advisers allocate a share of their clients' funds in these financial products. And that figure could double in 2020.

Invest in Bitcoin or another cryptocurrency presents an obvious risk of capital loss. In fact, in a report released this week, Deutsche Bank recalled that Bitcoin is too volatile to be considered a store of reliable value.

But the volatility can at the same time rhyme with high rate of return. This certainly partly explains the growing interest of independent investment advisers (independent registered investment advisors or RIA) with regard to crypto-active.

Independent advisers freer from their investments

According to one study by Bitwise and ETF Trends, about 9% of these professionals currently allocate a share of their clients' funds in these financial assets, such as Bitcoin. For comparison, they invest more in these products than financial planners, agency representatives and other brokers.

This is mainly due to lower restrictions for these independent advisers than for other brokers, who are more constrained in terms of investments that can be made on behalf of their clients.

Among all the financial advisers taken into account in the study, the share of investors in crypto assets remains reduced to around 6%, says the study. But this proportion could increase sharply. The authors thus estimate that it could double in 2020, see more.

Crypto-assets, separate and high-yielding assets

One reason in particular would justify this growing interest: lack of correlation between an asset like Bitcoin with other classes of financial assets. This is even the first reason to include it in their clients' portfolios for 54% of financial advisers.

From our point of view, 2019 was marked by a significant increase among mainstream media and traditional Wall Street analysts, who see crypto as a 'safe haven' and a new form of 'digital gold' . This message seems to have found an echo in the community of financial advisers ”considers Bitwise.

Furthermore, the potentially high returns associated with crypto-assets are another major reason for advisers (30%) to recommend their acquisition. They also respond to a request from their customers (26%) and have the possibility, via these products, of diversifying their investment offer (23%) among their customers.