Financial Advisors Keen To Up Crypto Investments – Survey

Key Takeaways:

• Crypto market conditions are ugly on Monday, but a new Nasdaq survey made for bullish reading.
• The survey of 500 financial advisors indicated intentions to up portfolio allocations towards crypto.
• The survey also revealed that approval of spot crypto ETFs would speed investment in the space.

It’s not been a good start to the week for the global cryptocurrency market, with the aggregate market capitalisation of all major coins down more than 5.0% on the day to about $1.85T. That takes the global cryptocurrency market’s on the month drop in market cap to over 10%.

Market commentators are citing the decline as being driven by a sharp recent move higher in global bond yields (this has been most acute in the US and Eurozone), as major central banks like the US Federal Reserve and European Central Bank signal intentions to raise interest rates to combat rampant inflation.

At the margin, higher bond yields raise the “opportunity cost” of holding non-yielding assets such as cryptocurrencies (and precious metals).

Whilst this does present a challenging backdrop for crypto markets in the coming quarters – indeed, most analysts don’t expect 2022 to be anything like as bullish 2021 – there was some good news for the crypto community to cheer on Monday…

Nasdaq Survey Shows Financial Advisors Warming To Crypto

Nasdaq released a new survey of 500 financial who are already invested in or are thinking about investing in crypto and it made for some very promising reading.

Of those advisors who have already allocated a portion of their portfolios to crypto, some 86% said they will be increasing their exposure over the next 12 months and none said they plan to decrease exposure.

50% of this group said they were already invested in Bitcoin futures Exchange Traded Funds (ETF) and another 28% said they wanted to get into them over the next 12 months.

Of the entire group surveyed, 6% was the mean allocation touted as ideal for their client’s portfolios. 72% of the advisors said they would be more likely to allocate client money into crypto if a spot, as opposed to futures, ETF product was offered in the US.

Analysts at Bloomberg Intelligence recently wrote that a spot Bitcoin ETFs could start getting US Securities and Exchange Commission approval by mid-2023, given proposed rule change that would bring cryptocurrency exchanges into the regulatory fold.

Meanwhile, 69% of the advisors surveyed by Nasdaq said they would consider using an index fund to get broad exposure to the cryptocurrency asset class.

A Boost To The Institutional Adoption Narrative

One of the key narratives driving up the market capitalisation of the broad cryptocurrency market over the last few years has been the idea that financial institutions will increasingly seek to invest in crypto.

The latest survey from Nasdaq suggests that despite the market’s recent ups and downs, the cryptocurrency market’s long-term growth trajectory remains strongly positive.

Though it seems slow-moving regulatory authorities in the US will make force the crypto community to wait, eventual approvals in the US of spot crypto ETFs could be a key milestone towards greater investment inflows into the sector.

Macro conditions should become more favourable to the crypto space in the coming years as inflation normalises and the pre-pandemic deflationary forces of aging populations, globalisation and technological progression return. That suggests, in the long-run, monetary conditions should remain relatively accommodative.

Crypto bulls are likely to continue to project that the space’s aggregate market cap can reach gold’s market cap of just over $12T within a five to seven-year time horizon.