In Focus: Megatrends  

'Advisers must accept that crypto is here to stay'

 

Crypto is an established asset class and will enter the mainstream, according to Jason Guthrie, head of digital assets at Wisdom Tree.

In the latest edition of the FTAdviser In Focus fireside chat, in partnership with Wisdom Tree, Guthrie said: "We are past the point where there is speculation around whether or not this is a trend that's here to stay.

"Cryptocurrencies have firmly established themselves as a new asset class and it truly is something that people can't ignore."

He said investors will increasingly chose service providers based on their ability to gain access to the digital assets market.

Digital assets encompass more than 5,000 coins, non-fungible tokens, and topics such as the metaverse, as well as the technologies that power these protocols.

It is those platforms that are evolving strongly at the moment, said Guthrie, taking the technology away from a "winner takes all" investment space, which some investors might feel they cannot participate in, towards a "multi blockchain future" with an emphasis on interoperability.

This has "broadened out the investment universe for a lot of people because it... means you've got opportunities to put capital to work against a variety of protocols," Guthrie said.

Yet there remains a level of uncertainty over how the space will evolve over the next decade, which brings with it high volatility.

Guthrie said: "People need to treat this investment as such. I don't think anybody is out there advocating 50 per cent of somebody's portfolio should be in cryptocurrency. This is how you account for risk, by making risk-assessed allocations.

"We see people doing 1, 2, 3, 5 per cent of a portfolio [as part of a] risk-adjusted approach to adding it in. And that's what you see with other asset classes as well."

So, could crypto become mainstream? "Absolutely," said Guthrie. "We are already on the path to doing that; 2 per cent or so of the global population is involved in crypto at the moment, that's only going to grow."

To hear more about the ethical dilemmas around crypto and how crypto can help diversify a portfolio, watch the video above.

carmen.reichman@ft.com