A new Bitwise survey highlights a more favorable attitude toward Bitcoin and cryptomontages.
Financial advisors are increasingly using crypto-currencies such as Bitcoin (BTC) as a hedge against inflation, underscoring the dramatic shift in institutional sentiment towards digital assets.
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„Bitwise/ETF Trends 2021 Benchmark Survey“ reveals that 9.4% of financial advisors were allocating money to cryptomoney in 2020, an increase of 49% from the previous year. Of the advisors who currently do not allocate positions to cryptomonies, 17% said they will gain exposure „definitely“ or „probably“ in 2021.
Advisors are buying crypto-currencies for many reasons, the main one being their potential coverage against inflation. As Bitwise noted, 25 percent of advisors cited inflation coverage as one of the most attractive features of this asset class. That’s an increase from just 9% last year.
The report said:
„This year’s survey saw a sharp increase in advisors highlighting the ‚high potential returns‘ of cryptosystems and their role in ‚inflation hedging‘ as key attractive features of the asset class.
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A total of 994 consultants participated in the survey, compared to 415 the previous year. Independent registered investment advisors represented 45% of respondents, followed by independent stockbrokers (25%), financial planners (19%) and news agency representatives (11%).
Bitcoin appears to be benefiting from the systemic devaluation of the dollar as more investors choose to leave the traditional financial system. The free fall of the dollar is expected to continue this year as the incoming administration of Joe Biden prepares a multi-million dollar stimulus plan, effectively picking up where Donald Trump left off.
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Although institutions currently represent a small fraction of all Bitcoin holdings, their impact on the market is growing. Goldman Sachs executive Jeff Currie believes that institutional adoption has put Bitcoin on the road to maturity, but noted that more adoption is needed to stabilize the asset class.
The assets managed by Bitwise soared to $500 million in December 2020, a five-fold increase from two months earlier. The company’s record inflows reflect the new demand from investment professionals, including advisors, hedge funds, and corporations.