Nearly a year and a half after Bitcoin
Spot exchange traded funds were detached on the US financial system, financial advisers are still trying to wrap their heads around crypto.
It is according to Gerry O’Shea, head of Global Market Insights at Crypto Asset Manager Hashdex.
“The overwhelming majority of financial advisers in particular do not recommend an award to Bitcoin or Crypto to their clients at this time,” O’Shea told Coindesk in an interview.
“Of course, there are some out there who have been very proactive to think about this space and make their clients expose to it, but it’s really a small subgroup of the overall market,” he added. “Most of what we’ve done in the last few years is based on education.”
Advisers are susceptible to all this, O’SHEA said – it’s simply that Due Diligence takes a while and that they move relatively slowly. In other words, these are still very early days with regard to advisers who recommend crypto exposure to their clients.
Their questions have gone beyond trying to understand what Bitcoin or Blockchain is, and now focuses more on the role that digital assets can play in someone’s portfolio, according to O’Shea. Should it be seen as an equity allocation? Should it replace gold? General skepticism towards the asset class as a whole tends to be limited to older generations of financial advisers.
At the top of the list of concerns is volatility. Advisers may be aware that Bitcoin is a developing asset with a 16-year-old track record, but at the end of the day they can still struggle to make the ordinary 20% or more falls.
Anxiety for Bitcoin’s energy consumption – which was big enough in 2021 for Tesla to stop receiving Bitcoin payments – somewhat disappeared to second place, O’Shea said. In fact, it seems that the story of Proof-of-Work has changed significantly in the last few months, he noted, with people who are increasingly appreciating that Bitcoin mining can help develop renewable energy projects.
Getting on the third is crime. Bitcoin is still often seen, even by members of Congress, as a payment system that facilitates drug dealers and sanctions. Financial advisers still bring up as a problem, O’Shea said.
For him, there are two main themes in 2025 when it comes to digital assets: Bitcoin and StableCoins. And while it is not so straightforward to get exposure to the growth of the stablecoin market, he said that smart contract platforms such as Ethereum and Solana – which give the infrastructure to stablecoins to work – be of interest to investors.
“There is definitely real benefit to these platforms. Many people refer to stable coins as the first killer -App, not? Because it’s something that can understand intuitively,” said O’Shea.
In any case, the hesitation of Bitcoin does not last forever, he predicted. “These people are under valued, how developed this ecosystem and how beneficial an allocation to this asset class can be in the longer term,” he said. “Even at the end of the year, there will be much more that appreciates that fact.”
