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- Why Advisors' See Crypto As Both Too Risky And Necessary
Why Advisors' See Crypto As Both Too Risky And Necessary
Trump 2.0 is making advisors reevaluate crypto
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Happy Sunday, and welcome to Benzinga’s financial advisor newsletter!
Today, we’re looking at why advisors see crypto as both too risky to recommend, and as necessary to their business — and how we can square that circle to create more value for advisors and their clients both.
So, let’s get to it!
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INDUSTRY CHATTER
The rise of cryptocurrencies and the new administration's friendliness toward digital assets have left advisors deeply conflicted about the asset class.
On the one hand, 62% of advisors say recommending bitcoin and other cryptocurrencies goes against their fiduciary duties, and half think doing so would make colleagues think less of them.
On the other hand, 85% of advisors say their firm's views on digital assets have changed since President Trump won re-election, and 79% agree that, with more and more clients putting money into cryptocurrencies, the role of advisors is becoming to manage the risk that poses for clients, according to a new survey by CoinShares.
Advisors Want Independent Crypto Education
Squaring this circle will require more information and education about digital assets. Over 80% of surveyed advisors were willing to spend money on cryptocurrency education, but wanted that information to be independent. That excludes crypto exchanges, while many "crypto-native" educational resources are difficult to get into for those unfamiliar with the space.
By the way, for independent news on all things cryptocurrency and digital assets, check out Benzinga's own crypto news right here.
In addition to education, new regulations also seem set to improve advisors' views on digital assets. In the CoinShares survey, 88% of advisors said the SEC's recent approval of bitcoin and Ethereum ETFs made them more positive about cryptocurrencies, and almost two-thirds said SEC approval was in the top three factors that most determined whether they felt it was appropriate to recommend cryptocurrency investments.
The New Administration Is Making Advisors Reevaluate Crypto
The new administration's much more crypto-friendly stance suggests the SEC will be approving more digital asset funds, and faster, giving advisors a wider variety of options to choose from when building cryptocurrency portfolios for their clients.
Given these trends, and the growing demand for cryptocurrencies especially among the younger investors whom advisors looking to grow their businesses need to court, advisors can start getting ahead of the game by diving into the world of digital assets and educating themselves on the strengths and weaknesses of this growing market now to gain an edge on the competition. To see how one prominent, crypto-focused advisor handles this, check out Benzinga's interview series with him here and here.
MARKET RECAP
Wall Street eased from record highs after Walmart's weak outlook raised concerns about consumer spending and economic growth, while investors also assessed signals from the Federal Reserve and trade policy uncertainties.
Minutes from the latest Fed meeting confirmed a cautious stance. Officials stressed the need for more evidence that inflation had cooled before considering rate cuts. Several policymakers suggested that rates could stay high if economic conditions remained strong and inflation persisted.
They also cited inflation risks from potential shifts in trade and immigration policies, supply chain disruptions due to geopolitical tensions and stronger-than-expected consumer spending.
Earlier in the week, President Donald Trump announced plans to impose a 25% tariff on imports of autos, semiconductors and pharmaceuticals, set to take effect on April 2, heightening trade uncertainty, particularly for multinational companies reliant on global supply chains.
On Tuesday, U.S. officials, led by Secretary of State Marco Rubio, met with Russian representatives, headed by Foreign Minister Sergey Lavrov, in Saudi Arabia to initiate discussions on ending the war in Ukraine. Ukrainian President Volodymyr Zelenskyy reiterated that his country will not accept any peace agreement negotiated without its direct participation. Notably, no European representatives attended talks in Saudi Arabia.
Palantir Technologies Inc (PLTR) — the S&P 500's top performer in 2024 — plunged after reports indicated that the Pentagon, one of its largest clients, was preparing for deep budget cuts. Investor concerns grew further after CEO Alex Karp disclosed plans to sell nearly 10 million shares over the next six months.
Chinese technology stocks surged on Friday, led by Alibaba Group Holding Ltd (BABA), which spiked after delivering strong earnings and upbeat guidance. Optimism also rose amid speculation that China's central bank could ease monetary policy, alongside new fiscal stimulus measures from policymakers after the annual parliamentary meeting in early March.
THE WEEK AHEAD
Economic Data
Monday: US Treasury note auctions
Tuesday: US house price index
Wednesday: US January new home sales
Thursday: US initial jobless claims and the Fed’s preferred measure of inflation
Friday: US January personal income and spending
Earnings
Click here for the full calendar of economic data and earnings reports.
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