crypto

CFOs & Financial Advisors’ Appetite for Bitcoin / Crypto

While Bitcoin continues to grow in popularity, 2 recent studies have been released around CFO’s and financial advisors’ appetite for crypto.

The first study was conducted by the global research and advisory company Gartner Inc, which interviewed randomly 77 CFOs on their intention to buy/hold Bitcoin as a corporate asset; and the second study elicited 994 eligible, complete responses from financial advisors, taking a cross-sample of different types of advisors from across the USA (including independent registered investment advisors (RIAs), broker-dealer representatives, financial planners and wirehouse representatives) in order to draft a global trend of the financial advisor’s attitudes towards crypto assets.

According to Gartner, only 5% of Finance Executives polled in February 2021 are planning to hold Bitcoin as a corporate asset in 2021 and 84% of respondents are not planning to ever hold bitcoin as a corporate asset, as they consider that Bitcoin’s volatility posed a financial risk.

Apart from volatility, other big issues according to respondents are : 

Board risk aversion (39%),
Slow adoption as an accepted form of payment or exchange (38%),
Regulatory concerns (32%),
Lack of expertise in cryptocurrencies (30%)
Cyber risk 25%
Complex accounting treatment 18%.

Similarly, the Bitwise/ETF Trends’ study highlights below factors as respondents key elements to allocate crypto assets comfortably :

Better regulation 51%

Better education 50%

Launch of a bitcoin ETF 47%

Better custodial solutions 39%

Easier trading 32%

Less volatility 25%

Other 2%

“There are a lot of unresolved issues when it comes to the use of Bitcoin as a corporate asset. It’s unlikely that adoption will increase rapidly until we get more clarity on these challenges.”

Alexander Bant, chief of research in the Gartner Finance practice

Even the 16% of respondents of Gartner survey who are willing to adopt the cryptocurrency as part of their organization’s financial strategy appeared in no rush but 71% of respondents confess that the top things they’d like to know is what others are actually doing with Bitcoin.

“It’s important to remember this is a nascent phenomenon in the long timeline of corporate assets. Finance leaders who are tasked with ensuring financial stability are not prone to making speculative leaps into unknown territory.”

Alexander Bant, chief of research in the Gartner Finance practice

Both studies are quite similar when it come to crypto allocation today:

  • 5% of Gartner’s respondents indicated they would begin to buy/hold Bitcoin in 2021; 1% said they would do at some point in 2022-2023 and the remaining 9% is considering it for 2024 or later. It is important to mention that there is no difference in the answers between small organizations (<$1Bn revenue) and large organizations (>$1Bn revenue), but 50% of respondents from the technology sector anticipate buying/holding cryptocurrency in the future.
  • Advisors allocation to crypto compared with last year has been raising from 6.3% to 9.4% in 2020, and 17% of advisors are considering making their first allocation to crypto in 2021.

“It’s still early days for crypto, with less than 10% of advisors allocating today. At the same time, adoption and interest are growing: The survey suggests the number of advisors allocating could double or more in the year ahead.”

Matt Hougan, chief investment officer for Bitwise

As a matter of fact 81% of all financial advisors reported receiving questions from clients on crypto in 2020, up from 76% in 2019.

So among advisors who are not currently allocating to crypto, 17% are either “definitely” (2%) or “probably” (15%) allocating in 2021.

“Financial advisors are increasingly looking for exposure to alternative assets, and interest in crypto is rising. We’ve also seen a steady progression of interest in crypto from clients of financial advisors in the three years we’ve run this survey together. I see no reason for that to change in the year to come.”

Tom Lydon, founder and CEO of ETF Trends

The number 1 motivation for advisors of rising interest is due to crypto’s uncorrelated returns (54%), and inflation hedging which saw the largest uptick in interest, with 25% of advisors highlighting it as an attractive feature of crypto, up from just 9% last year.

51% of advisors see the crypto as a portfolio “alternatives”, versus 57% in 2020, while interestingly, the most popular option for advisors is to turn to their equity sleeve to fund a crypto allocation (up from 12% to 18%). And when financial are being asked what the most appealing investment vehicle for crypto would be, 64% chose “ETF.”

Bitwise / ETF Trends survey is available here

Article: Joana Foglia – Source: The Bitwise/ETF Trends 2021 Benchmark Survey of Financial Advisor Attitudes Toward Cryptoassets ; Gartner Survey Suggests Most Finance Executives Not Planning to Hold Bitcoin as a Corporate Asset

Post Author: Wealth Monaco