Crypto Trends 2022

The Bitwise/ETF Trends Survey is an annual survey for the crypto industry, published by ‘Bitwise’ and ‘ETF trends’ and released each January.

Overall, the 2022 survey’s findings show a rise in crypto allocations among financial advisors. 47% of all advisors reported owning crypto assets in their personal portfolios. 72% of those invested in crypto had exposure to Bitcoin, 50% had exposure to Ethereum, 16% invested in other altcoins. Most of them are interested in investing more in the crypto industry, but 16% believe the crypto assets are in a bubble. Better regulation, better custodian solutions, and a spot-based ETF can significantly increase the appetite of advisors to buy more crypto.

Previous Year’s (2021) Highlights

These are some major events that happened in 2021:

• El Salvador declared Bitcoin legal tender
• The first-ever futures-based bitcoin ETF in the US
• Tesla bought Bitcoin
• China banned Bitcoin mining
• Crypto market capitalization reached a record $3 trillion
• Coinbase went public at a $60+ billion valuation
• Crypto companies attracted record amounts of venture capital
• Non-fungible tokens (NFTs) became one of the most-searched terms on Google
• Facebook Meta and Metaverse created a massive trend, in late 2021

The 2022 Crypto Survey Highlights:

Do the advisors own crypto?

• 47% of all advisors reported owning crypto assets in their personal portfolios, nearly double the rate of the prior year (24% in 2020 and 17% in 2019).
• In terms of specific crypto assets, 72% of those invested in crypto had exposure to Bitcoin, 50% had exposure to Ethereum, 16% invested in other altcoins such as Solana or Cardano, and 54% of advisor clients had exposure to crypto equities.

What about their clients?

• The percentage of advisors allocating to crypto in client accounts grew sharply, from 9% last year to 16% this year. An additional 14% of advisors said they will “probably” or “definitely” allocate in 2022.
• At least two-thirds of advisor clients (67%) were investing in crypto on their own going into 2022, compared to just 36% and 35% in the previous two years’ surveys.
• Among advisors allocating to crypto in client accounts, 80% hold crypto at a weight of 5% or less in client portfolios.
• Every advisor who currently has an allocation in client accounts plans to either “maintain” (42%) or “increase” (58%) that exposure in 2022.
• 94% of advisors received questions from clients about crypto in 2021, up from 81% the year before.

How do advisors see 2022?

• 82% of advisors said they’d prefer investing in a spot Bitcoin ETF vs. a futures-based bitcoin ETF (18%).
• 53% of respondents believe that the price of Bitcoin will top $100,000 within the next five years.
• 45% of advisors indicated a desire to allocate to Bitcoin, 46% to crypto equities, and 41% of advisors considering an investment in ETH in 2022.
• 16% of advisors believe crypto assets are in a bubble, compared to 6% in 2020.

What is preventing participants from allocating to Crypto?

Advisors continue to highlight a wide variety of concerns:

• 60% of advisors cited “regulatory uncertainty” as a barrier to greater crypto adoption in portfolios, up from 52% in last year’s survey.
• Volatility also loomed large, with 53% of respondents expressing concern in that area, compared to 38% the year before.
• 32% cited “Lack of easily accessible investment vehicles like ETFs or mutual funds” as a barrier, compared to 35% the year before.
• 31% of respondents expressed custody concerns/fear of hacks, compared to 29% the year before.
• 16% of respondents believe crypto assets are in a bubble, compared to 6% in 2020.

What can make participants allocate more to Crypto in the future?

What can make advisors allocate more in the future:

• 55%, better regulation
• 46%, better custodian solutions
• 44%, a spot-based ETF
• 34%, less volatility

The methodology of the Bitwise/ETF Trends 2022 Benchmark

The survey elicited 619 eligible, complete responses from financial advisors (from the 994 responses received in the 2021 survey):

• The mean advisor in the survey had between $25 million and $50 million in assets under management
• 45% of responders are independent RIAs
• 30% of responders are independent broker-dealer representatives
• 20% of responders are financial planners
• 4% of responders are wirehouse representatives

■ The Bitwise/ETF Trends 2022 Benchmark Survey of Financial Advisor Attitudes Toward Crypto Assets

Source: www.bitwiseinvestments.com (January 2022)