As of late April 11, bitcoin was approaching a year-to-date gain of 85%. Ethereum, bitcoin’s nearest rival, roughly doubled since the start of the year and some other, far more speculative cryptocurrencies are posting returns even better than that.
In theory, performances such as those, particularly in short time frames, serve to renew investors’ interest in an asset class. Perhaps advisors are suddenly fielding more crypto-related questions today than they were six or 12 months ago.
On the other handle, it’s reasonable to assume some clients were chastened by last year’s “crypto winter” and remain that way, indicating their interest in digital assets is low and likely to remain that way for some time.
“Cryptocurrency markets are taking hits from all sides – from declines in value to multiple corporate bankruptcies to lawsuits and regulatory threats. Among the vast majority of Americans who say they have heard at least a little about cryptocurrency (88%), three-quarters say they are not confident that current ways to invest in, trade or use cryptocurrencies are reliable and safe,” notes the Pew Research Center.
Alarming statistics to be sure, but there’s much more advisors should be aware.
Crypto Demographic Trends Need to Be Acknowledged
It’s not surprising that some clients are crypto-averse following 2022. Nor is surprising that younger clients are far more crypto-confident than their parents and grandparents. Still, the Pew survey contains some interesting tidbits broken down along demographic lines and advisors can’t afford to ignore these data points.
“Cryptocurrency use also differs by race, ethnicity and income level. Some 24% of Asian adults and 21% of Black or Hispanic adults say they have ever invested in or used a cryptocurrency, compared with 14% of White adults,” according to Pew.
One way of looking at that is advisors looking to broader the horizons of their client bases can leverage crypto, particularly right-sizing it in client portfolios, to better connect with minority groups. There appears to be good reason to evaluate that approach.
“There are differences by race, ethnicity and household income among newer cryptocurrency investors. Black users (27%) are more likely than White users (12%) to say they first used cryptocurrency within the past year. Roughly two-in-ten Hispanic users (21%) say the same,” adds Pew.
Even Educated Clients Need Crypto Help
When it comes to crypto, advisors don’t need to get involved with extoling its virtues or advocating all clients stay away from it. The reality is many clients are going to get involved on their own and eventually need assistance. That includes educated clients.
As Pew points out, 45% of those surveyed that are either college graduates are spent some time in college are likely to say they’ve suffered crypto investment losses. On the other hand, plenty of other clients don’t share that experience, confirming crypto is an opportunity-rich field in which advisors can cultivate client relationships.
“When it comes to the impact these investments have had on users’ personal finances, three-in-five users (60%) say that they have neither helped nor hurt. Roughly equal shares say that these investments have helped (20%) or hurt (19%) their finances,” concludes Pew.