Is Bitcoin’s recent run pulling advisors and investors back in – just when they thought they were out?
After spending the spring and summer months quietly drifting lower, Bitcoin has screamed higher since the start of September, surging almost 28 percent in price from $54,000 to $69,000. The cryptocurrency is now up almost 64 percent for the year, putting it within striking distance of its all-time high of $73,835 which it hit back in early March of this year.
The recent resurgence has once again put Bitcoin in the headlines, not to mention the crosshairs of advisors who are once again being forced by clients to weigh in on cryptocurrency as a portfolio component.
Stoyan Petev, certified financial planner at Clarity 2 Prosperity, attributes the run-up in Bitcoin this year mostly to the SEC's approval of Bitcoin ETFs in January which led to massive institutional adoption, as well as more companies using it as a Treasury asset and the halving event that cut supply of new Bitcoin mined by 50 percent. He says there has been a step-up in client inquiries of late, but no meaningful spike in demand - at least not yet.
“We currently do not have any allocation to Bitcoin, or crypto in general, in our client portfolios,” said Petev. “We let clients who are interested and have the ability to tolerate the associated volatility invest in it separately. We are still looking for more conclusive evidence regarding its correlation to other broad asset classes and its purported use as inflation hedge.”
Similarly, Nathan Hoyt, chief investment officer at Regent Peak Wealth Advisors, says he has been “fielding more calls from clients asking questions about crypto currencies and Bitcoin in particular” as the price has climbed this fall. Nevertheless, he too is not seeing a commensurate increase in demand from investors.
“Some clients are taking advantage of the price volatility of Bitcoin in both directions, but the vast majority of clients continue to avoid owning it as it remains speculative and with large price swings,” said Hoyt, who describes himself as “neutral” on the asset class.
In Hoyt’s view, the primary narrative for Bitcoin’s recent surge is the fiscally irresponsible US government’s current path to currency devaluation. On top of that, he believes the market's “risk-on” environment, and the adoption of Bitcoin ETF and spot price tracking vehicles is taking hold in traditional trading markets.
Meanwhile, Kristen Mirabella, head of partnerships at Eaglebrook, a firm that deals primarily in digital assets, says interest from the wealth and asset management sectors is rebounding due to the bullish momentum ahead of the election.
“Bitcoin has gained significant traction in the institutional space this year, with BTC and ETH ETF approvals and major asset managers entering the market. This momentum signals to investors that crypto is establishing a solid foothold, further validated by emerging use cases,” said Mirabella.
All that said, Nicholas Codola, senior portfolio manager at Orion, says he has not seen any additional interest in Bitcoin since the start of the run, nor has he seen any “interest’ to action.” Codola points to politics as the primary culprit for Bitcoin’s rise.
“Both political parties have recently embraced cryptocurrency, so the removal of some of those risks are helping,” said Codola. “There may also be a small Trump trade – he is viewed as more pro-crypto than Harris so his recent surge in the polls may be lifting BTC too.”
Likewise, Ryan Bond, wealth manager at Savvy Advisors, has not seen a significant increase in interest or in client conversations even given the significant run-up in prices. And both personally and professionally he is not making a move despite Bitcoin’s reemergence in the financial news.
“In the cases where we have bitcoin exposure as part of an allocation, it is now viewed as a long-term investment where the only buys and sells at this stage would be rebalance related and not intended to significantly increase or decrease Bitcoin exposure,” said Bond.
Pro-bitcoin professionals, however, says the cryptocurrency has ushered in change.
“LPL has evolved significantly over the last decade and still wants to scale up,” says one industry executive.
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