Ben Strack

<div id="highlights-block_61e9dd4f589c2" class="highlights">
 <ul>
 <li>A report by Bitwise Asset Management and ETF Trends found that 94% of financial advisors fielded crypto questions from clients in 2021 </li>
 <li>There was a roughly even split between advisers considering an investment in crypto equities versus direct crypto investments this year</li>
 </ul>
 
</div>



Financial advisors increasingly included crypto in client portfolios last year, according to <a href="https://static.bitwiseinvestments.com/Research/Bitwise-ETF-Trends-2022-Benchmark-Survey.pdf">a recent survey</a> — and even more money managers plan to deploy capital in the space this year.



The findings, released by Bitwise Asset Management and ETF Trends on Thursday, indicate that the percentage of financial professionals investing client funds in crypto rose from 9% to 15% over the past year. Most holdings, for now, are small, with 80% of respondents capping digital assets to 5% of a given portfolio.&nbsp;



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“Crypto has gone from a tulip craze-style fad to a real, lasting phenomenon,” ETF Trends Managing Editor Lara Crigger told Blockworks. “Advisors can&#8217;t just ignore the questions anymore. They must be proactive about crypto education, not just for their clients but for themselves.”



The survey included 619 responses from independent registered investment advisors, broker-dealer representatives and financial planners in the US.&nbsp;



<h3 class="wp-block-heading">Allocations to the space grow</h3>



To go along with the 15% of advisors that invested in crypto last year, an additional 14% said they will “probably” or “definitely” have crypto holdings this year.&nbsp;



The expected increase comes as 94% of advisors reported receiving questions from clients about crypto in 2021, up from 81% the year before



Crigger said she expects advisors adding crypto to their clients’ investment mix to rise sharply, noting that 47% of advisors said they have personal crypto holdings — a near-doubling from the year before.&nbsp;



“Seems like an odd mismatch, perhaps, but I think advisors aren&#8217;t willing to put their clients in something that they haven&#8217;t experienced for themselves,” she said. “Right now, they&#8217;re conducting hands-on research, using their own accounts. If it makes sense, they&#8217;ll apply that knowledge to their clients&#8217; portfolios.”&nbsp;



More advisors than now, however, are remaining on the sidelines, citing volatility concerns, plus a lack of regulatory clarity.&nbsp;



<div class="wp-block-image"><figure class="aligncenter size-large is-resized"><img loading="lazy" decoding="async" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Advisor-Crypto-Survey-Chart-737x1024.jpg" alt="" class="wp-image-15808" width="553" height="768" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Advisor-Crypto-Survey-Chart-737x1024.jpg?w=737 737w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Advisor-Crypto-Survey-Chart-737x1024.jpg?w=216 216w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Advisor-Crypto-Survey-Chart-737x1024.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Advisor-Crypto-Survey-Chart-737x1024.jpg?w=185 185w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Advisor-Crypto-Survey-Chart-737x1024.jpg?w=188 188w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Advisor-Crypto-Survey-Chart-737x1024.jpg?w=158 158w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Advisor-Crypto-Survey-Chart-737x1024.jpg?w=58 58w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Advisor-Crypto-Survey-Chart-737x1024.jpg?w=36 36w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/Advisor-Crypto-Survey-Chart-737x1024.jpg?w=944 944w" sizes="auto, (max-width: 553px) 100vw, 553px" /></figure></div>



Though more than half of respondents said they’re concerned about volatility, the same number believe that bitcoin will top $100,000 within five year. Just 15% last year estimated the cryptocurrency would rise that high over the same period.&nbsp;



Bitcoin traded around $42,600 at 4 p.m. ET on Thursday, up 1.8% over the last 24 hours.



<h3 class="wp-block-heading">Ways to invest in crypto</h3>



Though the US Securities and Exchange (SEC) approved <a href="https://cms.blockworks.co/what-does-demand-for-bitcoin-futures-etfs-look-like-in-2022/">bitcoin futures-based ETFs</a> to hit the market in October, the agency <a href="https://cms.blockworks.co/when-will-the-sec-approve-a-spot-bitcoin-etf/">has not yet approved</a> an ETF that would invest in bitcoin directly.&nbsp;



The SEC on Thursday denied a bitcoin ETF proposed by First Trust and SkyBridge Capital, according to a<a href="https://www.sec.gov/rules/sro/nysearca/2022/34-94006.pdf"> filing</a>.



The survey found that 82% of advisors said they’d prefer investing in a spot bitcoin ETF versus a futures-based alternative&nbsp; — which could be a long ways off in the U.S.&nbsp;



Meanwhile other advisors are focused on investing in the stocks of companies with exposure to digital assets. About 46% were bullish on buying crypto-related equities, compared to 45% interested in buying crypto outright.&nbsp;



The outlook on blue-chip crypto stocks such as Coinbase has become more rosey lately as companies look to diversify their revenue streams. Bank of America Research Analyst Jason Kupferberg said in a research note earlier this month that he’s upgraded Coinbase to a buy rating as the company plans to add products this year.&nbsp;



<meta charset="utf-8"><a href="https://cms.blockworks.co/ark-invest-coinbase-is-an-attractive-long-term-play/">Research professionals at Ark Invest have said</a> that Coinbase’s position as a crypto on-ramp and its additional planned launches make it an attractive long-term play. The firm bought about 200,000 shares of Coinbase across three of its ETFs over a two-day span earlier this month.



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Bitcoin

Survey: Financial Advisors Increasingly Allocating to Crypto

<div id="highlights-block_61e87c8091e63" class="highlights">
 <ul>
 <li>The acquisition and integration of Omniex will help simplify the experience for institutional investors looking to go deeper into crypto, the company said</li>
 <li>Gemini announced the acquisition of digital asset portfolio management platform BITRIA last week</li>
 </ul>
 
</div>



Less than a week after announcing its acquisition of digital asset portfolio management platform BITRIA, crypto exchange <a href="https://www.gemini.com/" target="_blank" rel="noreferrer noopener">Gemini</a> has bought trading technology platform <a href="https://omniex.io/" target="_blank" rel="noreferrer noopener">Omniex</a>.&nbsp;



Founded in 2017 by former State Street executives, Omniex provides order, execution and portfolio management system solutions for institutional crypto trading.



The acquisition and integration of Omniex into Gemini&#8217;s existing institutional custody, clearing and trading solutions simplifies the experience for institutional investors looking to go deeper into crypto, said Dave Abner, Gemini’s global head of business development.



Specifically, the integration will provide a single point of access to multiple exchanges and OTC liquidity sources, tools and algorithms to ensure trade transparency, and a trading experience with application programming interface (API) connectivity, according to Gemini’s <a href="https://www.gemini.com/blog/gemini-acquires-trading-technology-platform-omniex-launches-gemini-prime" target="_blank" rel="noreferrer noopener">Wednesday announcement.</a>&nbsp;&nbsp;



The buy allows Gemini to publicly launch a crypto prime-brokerage offering, <a href="https://www.gemini.com/prime" target="_blank" rel="noreferrer noopener">Gemini Prime</a>, which select clients have been using over the past year. The product’s full rollout is slated for the second quarter.



The Omniex team will be joining Gemini to expand and drive platform capabilities for the prime services division.



Gemini is seeking to build out its institutional business with crypto solutions that resemble offerings within traditional finance, Abner told Blockworks. 



The company announced <a href="https://cms.blockworks.co/gemini-now-a-one-stop-shop-for-advisors-after-bitria-buy/" target="_blank" rel="noreferrer noopener">its purchase of BITRIA</a> last week. That acquisition allows financial advisors to gain exposure beyond the closed-end funds and spot ETFs focused on the largest tokens, Abner previously noted.



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<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forwardguidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



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