No Client Exodus From Crypto After FTX Collapse, Advisors Say

What You Need to Know

Some clients understand crypto risk and seek to move to regulated custodians.
Those looking to exit realize crypto isn’t stable or a good inflation hedge, one advisor said.
Some are asking about buying bitcoin on the dip, an advisor says.

Cryptocurrency investors aren’t all swearing off digital assets after the FTX cryptocurrency exchange’s massive and unexpected collapse last week, according to financial advisors.

FTX Group, which ran the world’s second-largest crypto exchange, filed for bankruptcy protection last week, and its founder, Sam Bankman-Fried, often described as a wunderkind, resigned as CEO.

The exchange faces multiple investigations amid rumors alleging it lent customer assets to Bankman-Fried’s crypto trading firm Alameda Research, according to news reports. The FTX earthquake shook confidence in a market already considered speculative, wiping out nearly $5 billion in crypto stock valuation, Bloomberg reported Friday.

As the FTX debacle unfolded last week, ThinkAdvisor asked financial advisors the following:

If you have clients invested in crypto, what’s happening with them this week, what are they doing with their crypto and what are they asking you now?

Some clients remain committed to investing in digital assets, some aim to move their holdings to a regulated custodian, and others appear to be done with crypto, according to advisors.

“Since inception, nearly all clients of Intentional Living FP have owned bitcoin, with many having allocated a substantial portion of their total investable assets to bitcoin,” Intentional Living FP founder and financial planner Jim Crider responded via email last week.

“Due to proper education about bitcoin, crypto and the vast differences between the two, our clients retain conviction about the long-term value of their bitcoin, are unscathed by the noise of the crypto space, and are continuing to add to their bitcoin stack,” he told ThinkAdvisor.

(Companies, media and grifters have hijacked the term crypto to allude to anything remotely related to a blockchain, he explained. “Bitcoin is cryptocurrency, but what society equates ‘crypto’ to is not bitcoin,” he added.)

“Our clients are continuing to do as we’ve done all along; buy bitcoin and move it to cold storage where they are not reliant on or placing undue trust in third parties,” Crider said. “Our clients are asking about how much more bitcoin they should be allocating while the price has dipped and in preparation for the next halving cycle that takes place in April of 2024.”