2019 was supposed to be the year that Bitcoin hit $20,000, a price it last touched at the end of 2017. It was also the year that institutional floodgates opened for the cryptocurrency ecosystem, making it more liquid and resilient.

Neither of those things happened. Instead, cryptocurrency prices continued to flounder between excessive optimism and the plunging lows of depression as liquidity continued to be squeezed out by fly-by-night traders.

The price swings, criticism, and uncertainty pervading the cryptocurrency ecosystem hasn’t deterred financial advisors. According to a new survey released by investment firm Bitwise Asset Management last week, interest from financial advisors in cryptocurrencies has only increased in the last year. The San Francisco-based firm’s annual survey revealed that the number of advisors interested in crypto has doubled to 13% from 6% last year.

So, what do financial advisors see that ordinary investors don’t?

According to Bitwise, the biggest factor influencing their perspective is crypto’s low and uncorrelated returns to other mainstream assets, such as equities. In other words, Bitcoin (and crypto) prices increase when stock markets tank or there is geopolitical instability. (The reasoning is similar to that for gold, widely considered a safe haven for traders fleeing the volatility of mainstream markets). The other important draw for financial advisors are returns. “Crypto was the best performing asset last year,” stated Matt Hougan, head of research at Bitwise.  

A Novel Argument? Not Quite

To be sure, those arguments for Bitcoin and cryptocurrencies are not new.

Crypto enthusiasts have long pointed to a surge in crypto prices during times of political instability as proof of its status as a safe haven. But there is no conclusive proof that Bitcoin, or any other cryptocurrency, is a safe haven for investors and traders. Besides the safe haven argument may be attractive in an investing landscape where returns from other assets are low. Traders and financial advisors have been spoilt for choice in the last couple years. Based on a quick run through various sources, the S&P 500 has returned an average of 30 percent last year. Gold returned 19% last year.

Then there’s the fact that cryptocurrencies are not only being touted best-performing asset of last year but also of the last decade. That extraordinary performance, however, comes with several riders attached to it. Price volatility, generally an opportunity for traders to mint profits, regularly turn into blood baths in crypto land, wiping coins and millions of dollars of capitalizations out of existence. Even then traders might be willing to put money into crypto, if profits were safe and guaranteed.

Regulatory uncertainty muddies crypto waters further, however. With the exception of Bitcoin and Ethereum, most cryptocurrencies inhabit a regulatory no-man land. Bitwise’ own attempts to kickstart a Bitcoin ETF have repeatedly been stalled by the SEC. Price volatility spiked with regulatory uncertainty makes crypto a steep risk for client funds.

Not surprisingly, then, 72% of financial advisors in Bitwise’ survey have committed their personal funds into crypto. In that statistic lies the current narrative of Bitcoin. It was and still is a retail phenomenon, populated by individual traders interested in quick profits.