Both financial advisor and investor interest in cryptocurrencies is soaring, with the number of advisors investing in digital assets doubling in 2021, according to a new survey from Bitwise Asset Management.

In fact, advisors bought crypto en masse in 2021, albeit for themselves. Almost half of all advisors (47%) reported owning crypto assets in their personal portfolios, nearly double the rate of the prior year (24%), according to the Bitwise/ETF Trends Survey.

Client demand also climbed. Ninety-four percent (94%) of advisors fielded questions from clients about crypto in 2021, up from 81% the year before. More than half of advisors (51%) cited demand from clients as a reason that making a crypto allocation would be attractive, Bitwise reported.

Allocations in client portfolios followed, growing sharply. The percentage of advisors making allocations to crypto in client accounts jumped, from 9% last year to 16% this year. Those numbers were up from 6% two years ago. An additional 14% of advisors said they will “probably” or “definitely” allocate in 2022, Bitwise found.

“We are approaching the tipping point for the widespread adoption of crypto by financial advisors,” Bitwise Chief Investment Officer Matt Hougan said. “Two years ago, just 6% of advisors were allocating to crypto in client accounts; today it’s 15% and our survey suggests it will be nearly 30% by year-end.

The implications are significant, as financial advisors direct the vast majority of private individual wealth in America. “Advisor engagement in the space isn’t just growing, it’s growing at an accelerating rate,” Hougan added.

One advisor who has been investing in bitcoin since 2016 is not surprised. Daren Blonski, co-founder and managing principal of Sonoma Wealth Advisors in Sonoma, Calif. “In client portfolios we keep a very measured position. When you’ve got market volatility like we’ve seen, we use the opportunity to rebalance just like we would with any other asset class. We don’t say ‘the market sold off, we’re going to get rid of bitcoin.”

Blonski’s attraction to bitcoin in particular is based on the fact that it is the sole coin that is truly decentralized, which allows investors to deal directly without using a centralized exchange.  At the same time, there are only 21 million coins available and no more can be mined. And now countries such as El Salvador have made bitcoin their currency despite IMF criticism and pleas.

It’s the decentralization that makes bitcoin what it is,” Blonski said.  “At the same time, we now you have the U.S. oil and energy infrastructure utilizing bitcoin mining rigs to generate excess revenue.

As a result, “overnight Sen. Ted Cruz (R-Tex.) became an expert in bitcoin because his power base, the energy infrastructure, is using it. You also have gobs of millionaires and billionaires putting together PACs to protect bitcoin.”

While Federal Reserve rate hikes and other anti-inflationary measures will likely continue to cause volatility, Blonski said 90% of the institutions, family offices and big-wallet investors were still buying throughout the past week’s plunge, according to chain metrics. While the skittish sell off of by 10% of owners--mostly smaller investors-- took the price of bitcoin as low as $33,000 (down from $42, 581 on January 13), the price had rallied to $38,250 by noon today.

“We work almost entirely with retirees or those who are about to retire, so our client portfolios tend to be conservative and don’t hold much crypto or Bitcoin. We don’t go above 5% of portfolio value for those that do have it, and we generally like to see it in Roth accounts for its growth potential,” Matt Bacon, an advisor with the firm of Carmichael Hill said.

“Bitcoin has been around a little over a decade and these spates of gut-wrenching volatility are par for the course,” Carmichael added. “Adding it as part of a systematic rebalancing strategy is the best call, in my opinion. Its worth noting that Bitcoin took about three years to reach a new high after it crashed at the end of 2017. Anyone speculating in hopes of a quick buck may be waiting longer than they think,” Bacon added.

The survey found that fear of regulation and volatility are keeping some advisors on the sidelines, with 60% of advisors citing “regulatory uncertainty” as a barrier to greater crypto adoption in portfolios, up from 52% in last year’s survey. Volatility also loomed large, with 53% of respondents expressing concern, compared to 38% the year before, Bitwise found.

Still, Blonski and more than half of advisors surveyed by Bitwise are increasingly bullish on crypto valuations. More than half (53%) of respondents believe that the price of bitcoin will top $100,000 within five years. In last year’s survey, only 15% of respondents thought bitcoin would climb into the six figures.

“Advisors and their clients are becoming more confident and discerning in their understanding of crypto,” Tom Lydon, founder and CEO of ETF Trends said.