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Working in the crypto world, it seems as if the only thing I talk about these days—in my personal and professional life—is where the price of bitcoin is going. And for good reason. After being a relatively obscure asset class for years, it burst into the mainstream in late 2017.
According to the CoinDesk Bitcoin Price Index, Bitcoin started 2017 crossing $1,000. Fast forward nearly a year to December 17 and the price reached a high of $19,783.21.
It’s likely during this run-up that many of your clients first started asking you questions, such as:
- What is bitcoin?
- How does it work?
- What is bitcoin mining?
- What’s an ICO?
- My nephew told me about this new coin. Should I buy?
- How do I buy?
And the list goes on…
In conversations with financial advisors, we’ve heard these and many other questions. But we’ve also heard—and seen—many advisors take the stance that the asset is a scam, ignore it, and move on.
Your clients aren’t taking this stance, though. They are moving forward because they’re interested and see opportunity. And while there has certainly been a Wild West ethos around crypto, the asset is clearly growing up and becoming more legitimate.
Consider the news over the past six months:
- TD Ameritrade backed a newly launched crypto exchange
- Northern Trust created new tools to help traditional hedge funds invest
- Yale invested in a crypto hedge fund
- Intercontinental Exchange is launching a new company, Bakkt, which is creating a futures product that settles in bitcoin
And the biggest news of the year happened only a couple weeks ago when Fidelity, with total assets under administration of $6.8 billion, announced that it was launching a crypto trading platform specifically for institutional investors.
With these major financial institutions jumping head first into crypto, it’s become increasingly difficult to stick to the “this is a scam” and “this is all going to zero” talking points.
We’re beginning to see advisors and wealth managers begin to evolve their approach and outlook on the asset class.