Cryptocurrencies rose, and kept on rising, in 2024, making it one of the best performing asset classes of the year. Or at least for those financial advisors’ brave, lucky, or smart enough to hold it in client portfolios.
Bitcoin, by far the best known of the lot, is up 146 percent so far this year to more than $106,000. Ethereum has soared 72 percent year-to-date, while cardano is up about 80 percent.
Dogecoin, meanwhile, has skyrocketed over 330 percent so far in 2024. The digital currency, well known to be Elon Musk’s favorite coin, more than doubled in price to 40 cents since the Nov. 5 election of President Donald Trump, who promised to be the “most pro-crypto president” in history.
Yeah, it’s been a pretty good year for digital assets. And those good times were certainly helped along not just by President-elect Trump’s win, but by the Securities and Exchange Commission's approval of spot bitcoin exchange-traded funds on Jan. 10, 2024. Once the SEC decision arrived, the ETF providers rolled out crypto funds en masse, allowing wealth managers to add exposure to any client seeking it.
So where does crypto – and not just bitcoin – go from here, on the portfolio management side?
According to an InvestmentNews survey of 126 financial advisors in the fourth quarter, 16 percent of respondents said they plan to start adding cryptocurrency to client portfolios over the next 12 months, 24 percent will maintain their current exposure, 5 percent will decrease their holdings and 55 percent do not use it and don’t plan to in the coming year.
Michael Durso, CEO & CIO at Shorehaven Wealth Partners, is selectively adding bitcoin to client portfolios where the risk tolerance and investment timeframes align with their strategy. He said up to a 3 percent allocation provides meaningful diversification, effective risk management, and the potential for asymmetric returns. Meanwhile, for clients who have held bitcoin for some time and realized significant gains, he said he is rebalancing portfolios back to target weights to manage risk.
“One key advantage of partnering with crypto SMA platform Eaglebrook is its ability to optimize tax strategies for digital assets, including tax-loss harvesting during periods of volatility. Most of our clients who hold digital assets maintain exposure exclusively to bitcoin and Ethereum, aligning with a focused and prudent approach to this emerging asset class,” Durso said.
For his part, Chris King, CEO at Eaglebrook, said his clients fall into a handful of categories for their crypto investing, including 100 percent bitcoin, some combination of bitcoin and Ethereum, a portfolio of crypto assets beyond Ethereum and bitcoin, or active management of multi-coin strategies.
“Clients just dipping their toes in the crypto waters tend to stick with bitcoin and Ethereum. But for those who want to dive deeper, we suggest utilizing a professionally managed multi-coin strategy,” King said. “Crypto is an emerging and volatile asset class with unique considerations. By utilizing active management multi-coin strategies, advisors can provide their clients with diversification within their crypto portfolio and the benefit of an investment team entirely focused on the investment universe and relevant trends.”
Elsewhere, Matthew Klein, CEO of Matauro, said a number of his clients have owned bitcoin since 2013 and he has been adding the digital asset to more client portfolios of late.
“We see bitcoin as the macro economy’s only truly finite asset, which sets it apart from scarce assets like gold. That said, we’ve seen this movie before—Bitcoin runs up big and then crashes 80 percent. It’s not something we’ll add unless a client fully believes in its long-term potential,” Klein said.
As for other digital currencies, Klein said he’s not adding much else, though he’s “long believed in Ethereum’s potential.”
“Bitcoin is hard money, but Ethereum is the ‘world's supercomputer,’ capable of running decentralized apps, automating transactions, and executing complex processes, kind of like digital Lego pieces. The challenge is Ethereum’s identity—it’s still unclear whether it’s money, an execution layer, or a data availability layer—which has made some investors skeptical. For us, it’s only appropriate for someone who really understands the crypto ecosystem and buys into its vision,” said Klein.
Klein also believes the other powerhouse in the industry is Solana, which has risen 112 percent year-to-date.
“It’s a separate category because it’s not as decentralized. It has an inflationary token model, unlike Ethereum and bitcoin. It doesn’t share traditional crypto values but does offer a lot of applications. That said, there’s no easy way to integrate it into client portfolios at this point,” Klein said.
Jay Page, managing director at Caprock, said he is sticking with Bitcoin alone for clients in 2025 because it is “the only crypto asset that has been approved by the SEC as a commodity.”
“The finite amount of 21 million coins will not be surpassed, thus making it a finite resource with a half-life of infinity. Bitcoin is becoming a highly adopted digital asset with similar adoption rates as the internet had between 1999 and 2000,” Page said.
Finally, Craig Robson, founding principal and managing director at Regent Peak Wealth Advisors, said he continues to maintain digital assets, primarily bitcoin and Ethereum, within a portfolio construct for clients who are interested in owning this asset class as part of their overall Alternatives allocation.
He offers a few compelling reasons why advisors, and investors, will be more amenable to digital assets in the coming year, including the “improved regulatory environment and Congress continuing to embrace digital assets” and the use of “cold storage solutions to reduce the risk of predators obtaining access to one’s online account and stealing crypto assets.”
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