Almost a year and a half after bitcoin
spot exchange-traded funds were unleashed upon the U.S. financial system, financial advisors are still trying to wrap their heads around crypto.
That’s according to Gerry O’Shea, head of global market insights at crypto asset manager Hashdex.
“Of course, there are some out there that have been very proactively thinking about this space and getting their clients exposure to it, but that’s really a small subset of the overall market,” he added. “Most of what we’ve been doing in the last few years is based around education.”
Advisors are receptive to all of 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 in terms of advisors recommending crypto exposure to their clients.
Their questions have moved beyond trying to understand what bitcoin or blockchain is, and now focus 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 scepticism towards the asset class as a whole tends to be confined to older generations of financial advisors.
At the top of the list of concerns is volatility. Advisors may be aware that bitcoin is a developing asset with a 16-year track record, but at the end of the day, they may still struggle to stomach the currency’s regular 20% or more declines.
Anxieties about bitcoin’s energy consumption — which were big enough in 2021 for Tesla to stop receiving bitcoin payments — have somewhat receded to second place, O’Shea said. In fact, the narrative around proof-of-work seems to have changed significantly in the last few months, he noted, with people increasingly appreciating that bitcoin mining can help develop renewable energy projects.
Coming in third is criminality. Bitcoin is still often seen, even by members of Congress, as a payment system that facilitates drug dealers and sanctions evaders. Financial advisors still bring this up as a point of concern, O’Shea said.
For him, there are two main themes in 2025 when it comes to digital assets: bitcoin and stablecoins. And while it isn’t as straightforward to gain exposure to the growth of the stablecoin market, he stated that smart contract platforms such as Ethereum and Solana — which provide the infrastructure for stablecoins to function — should become interesting to investors.
“There is certainly real utility for these platforms. A lot of people refer to stable coins as the first killer app, right? Because it’s something that intuitively people can understand,” O’Shea said.
In any case, the hesitation around bitcoin won’t last forever, he predicted. “These folks are under-appreciating how developed this ecosystem is, and how beneficial an allocation to this asset class can be over the longer term,” he said. “Even by the end of the year, there’ll be a lot more that appreciate that fact.”
