Admittedly, this is a tricky piece to after Elon Musk said Tesla (NASDAQ:TSLA) will cease accepting Bitcoin as a form of payment, a decision that sparked a wave of selling among some of the larger cryptocurrencies.
As this article is being penned, Bitcoin is down more than 12% on an intraday basis on May 13. That's a stunning intraday decline for clients accustomed to stocks and bonds and Bitcoin's penchant for such moves is enough to chase some weaker hands from the market.
However, if volatility was a determinant of clients' desire to be involved with and interest in a specific asset class, it's safe to say Bitcoin wouldn't be sporting a five-figure price tag. Fact is, clients are increasingly interested in digital assets, presenting advisors with a compelling value-add opportunity.
Advisor that need convincing should examine Gemini's 2021 State of US Crypto Report. Two of the big takeaways from the report is that the crypto exchange founded by the famous Winklevoss twins is forecasting 19.3 million new entrants into the crypto market over the next year and that the number of participants in the market will double over that time frame.
There's Much More to This Story
The Gemini survey also contains some demographic data advisors can't afford to ignore. The study indicates 63% of those polled are “crypto curious” compared with 14% of investors already involved in the asset class and 23% that have no interest.
Of that 63%, a quarter are women in the 55 and up age group. Translation: Advisors should be discussing digital assets with retirees and women. Data confirm it's a conversation those client bases want to have.
There are some other interesting trends. Gemini says the average of current crypto investors is 38 years old with an average household income of $111,000 and a gender split of 74% male/26% female. Fifty-two percent of that group live in suburban or urban areas while 26% live in the country.
For the “crypto curious” faction, there's negligible downtick in income ($107,000), an slight increase in age to 44, but a significant shift in gender at 53% female/47% male. Rural representation in this group is also noticeably higher at 35%. Those factors and more should be music to the ears of crypto-savvy advisors.
“Education appears to be central to converting crypto-curious consumers from simply interested in crypto to actual crypto holders,” according to Gemini. “Over one-third (39%) of those who don’t yet own cryptocurrency consider themselves 'somewhat or very' knowledgeable about cryptocurrency. This indicates that consumers are attempting to learn before they dive in head first, but there’s still a significant opportunity for consumers to learn more: 60% of the crypto-curious identify as 'not very' or “not at all” knowledgeable about cryptocurrency today. More than two-thirds of U.S. adults (77%) indicate they are open to learning more about digital assets, whether they already own cryptocurrency or not.”
Shiny New Investors
Another opportunity for advisors in the form of just how many clients are new to digital assets, meaning they're likely yearning for advice and guidance and to expand their knowledge base beyond Bitcoin.
The Gemini study says 26% of those surveyed made their first crypto purchases either in the past six months or year. For advisors, it's also notable that many clients already see crypto as a viable long-term investment or having daily utility.
“The large majority of current crypto owners say they buy and hold crypto for its long-term investment potential. More than two-thirds (69%) buy and hold, compared to the 36% who actively buy and sell as a means to achieve profits and the 27% who actively use it to make purchases on the internet,” notes Gemini.
Putting it altogether, it's easy for clients to get jittery when Bitcoin posts double-digit intraday declines. However, they're obviously interested in this still nascent asset class and that's presenting advisors with generational opportunity.
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