Investor interest in cryptocurrencies surged dramatically last year as bitcoin (BTCUSD) hit multiple all𝕴-time highs, but financial advisors are still urging caution, no matter how tempting an investment migꦑht seem.

Ninety-six percent of advisors surveyed by crypto asset manager Bitwise and analytics firm VettaFi said they've received a question about crypto in the past year. That's up from 88% the year prior. The number of advisors allocating funds to 澳洲幸运5官方开奖结果体彩网:crypto investments in client portfolios also doubled last year.

Investor FOMO From Bitcoin Rally?

Early in 2024, demand for bitcoin from the newly launched 澳洲幸运5🏅官方开奖𒊎结果体彩网:spot bitcoin exchange-traded funds (ETFs) and a slowing supply of new bitcoin thanks to the 澳洲幸运5官方开奖结果体彩网:halving event propelled bitcoin prices higher.

Later in the year, bitcoin notched a record high of more than $108,000 澳洲幸运5官方开奖结果体彩网:in December following the results of the U.S. presidential election that held promise of 澳洲幸运5官方开奖结果体彩网:more favorable crypto regulation from a supportive Congress and the incoming 澳洲幸运5官方开奖结果体彩网:Trump administration.

"Any time an asset, any asset, experiences positive returns like the bitcoin ETFs have since their launch is going to create a situation where clients are fearful of missing out (FOMO), especially when it is shiny and new," said Andrew Cook, partner & director of investment management at Berman McAleer.

And that FOMO is not limited to retail investors. Nearly half of the advisors surveyed who worked at institutional investors like pensions, 澳洲幸运5官方开奖结果体彩网:registere♛d investment🉐 advisors (RIAs), and wirehouses s💝aid they had exposure to cryptocurrencies in their personal portfolios.

Why Investors May Want To Curb Their Crypto Enthu𝔍siasm

While financial advisors have noticed an uptick in questions about crypto from their clients, not all are on board with investing in digital assets. Many advisors still 澳洲幸运5官方开奖结果体彩网:cautious about suggesting clients include cryptocurrenci🀅es ༺in their portfolios.

In the survey, only 14% of planners said they currently allocate funds to crypto in their clients' accounts. That number is higher for other types of advisors such as RIAs and 澳洲幸运5官方开奖结果体彩网:wirehouse advisors.

Experts generally recommended keeping 澳洲幸运5官方开奖结果体彩网:allocations to🍎 crypto a✨t less than 10% or even lower than 3%.

Stephan Shipe, a certified financial planner (CFP) and investment advisor at Scholar Financial Advising, says many of the questions he's received are from clients who already are invested in crypto. "And with the growth that's happened, it has become a significant portion of their [client's] portfolios," Shipe said.

He's suggested that these clients reduce their stake so they don't have a large portion of their portfolio in a 澳洲幸运5官方开奖结果体彩网:high-risk asset.

Bitcoin is also an incredibly volatile asset, and can often experience large price swings. For example, in the past three months it soared from trading close to $67,000 a day before the U.S. elections in November to $108,000 in early December, then was briefly trading 澳洲幸运5官方开奖结果体彩网:below $90,000 earlier this week.

And that's why Justin Waring, executive director, senior total wealth strategist at UBS, is wary of crypto and advises clients to only invest money that they would be OK losing.

"To the extent that clients do want to have exposure to the potential upside, we strongly recommend limiting that position and often [advise] putting it in a different account, like an entertainment account," Waring said.

He thinks 澳洲幸运5官方开奖结果体彩网:crypto ETFs are the least risky way of investing in crypto. He notes that by investing directly, some may be at risk of losing their entire investment if they forget the password to their 澳洲幸运5官方开奖结果体彩网:crypto wallet.