(Kitco News) – The launch of spot Bitcoin (BTC) exchange-traded funds (ETFs) in the U.S. ushered in a new era of legitimacy for digital assets, and while registered investment advisors (RIA) have taken a cautious approach on recommending BTC to clients, when it comes to their own portfolios, one analyst suggested that most have already made allocations.
“Something remarkable happened during my talk at the Barron’s Advisor 100 Summit, a gathering of the top financial advisors in the U.S.,” wrote Matt Hougan, Chief Investment Officer at Bitwise. He described how his interactions with this group have changed since he started speaking there three years ago.
“I had the great pleasure of delivering a keynote address to the Barron’s Advisor 100 Summit, a gathering of the top financial advisors in the U.S. It was the third consecutive year I’d spoken to this group, but my first time on the main stage – thanks in part to the launch of Bitcoin ETFs this year,” Hougan said. “Whenever I give talks, I like to first gauge the room – to know if my listeners are crypto experts or crypto newbies, supporters or skeptics.”
“So I usually ask the following question: ‘By a show of hands, how many people in this room own Bitcoin or another crypto asset in their personal portfolio?’” he noted. “When I asked this question to the same crowd two years ago, only a few people raised their hands – maybe 10 or 20%. Last year, it was much the same.”
“This year, nearly every hand in the room went up,” Hougan said. “I don’t have an exact count, but I’d estimate at least 70% of the advisors in the room raised their hands. There’s a very sophisticated technical word that economists use for this kind of year-over-year phenomenon: whoa.”
As Hougan sought greater clarification, he found that while the advisors were more than willing to allocate portions of their portfolios to Bitcoin, they were more hesitant to recommend the same to their clients.
“To be clear: When I asked the same room how many of them had allocations to Bitcoin in client accounts, very few kept their hands raised,” he said. “Many of these advisors work for broker-dealers that do not even allow them to buy Bitcoin ETFs yet. But that will come.”
Hougan said one observation he has made in his seven years working for Bitwise is that “advisors virtually always allocate first in their personal accounts.”
“Client allocations typically follow 6 to 12 months later,” he added.
Hougan provided the following snippet of his speech at the Barron’s summit.
“A lot of people look at this chart and think: If I could invest in this chart, I would go all-in. Well you can invest in it, with Bitcoin,” he said.
“Bitcoin is the ultimate insurance policy against our government royally messing up the US dollar, taking on too much debt, and debasing the currency,” he added. “It is, as Paul Tudor Jones says, ‘the fastest horse in the race.’”
After noting the bevy of bullish signals suggesting Bitcoin could soon charge higher – including “the Fed’s first rate cut in four years, Bitcoin ETFs recently being approved by one of the nation’s largest wirehouses [Morgan Stanley], or the SEC’s recent approval of options on Bitcoin ETFs” – Hougan said, “the show of hands in Palm Beach was one of the most powerful signs of the times.”
“Those of us who live and breathe crypto 24/7/365 might forget, but buying a little bit of Bitcoin is incredibly powerful for people,” he said. “A personal connection breeds familiarity. When you hold and track Bitcoin in your own portfolio, fear and dismissal tend to give way to curiosity and, eventually, comfort.”
“More than anything, what I took from the event is that a wave of the most powerful people in finance are finally allocating to crypto,” Hougan concluded. “When it spreads from them to their clients, things could get interesting quickly.”
