Analysis: Wealth managers frustrated over bitcoin, anxious for piece of the action

NEW YORK (Reuters) – The rollercoster ride in bitcoin since the start of the year has not dampened wealth manager Jim Paulsen’s enthusiasm for the cryptocurrency.

Yet Paulsen, chief investment officer for Leuthold Group, which manages $1 billion, cannot own bitcoin in client portfolios due to regulatory constraints. This has left him on the sidelines watching the world’s most popular cyrptocurrency surge more than 900% since its March lows in volatile trading that also saw bitcoin lose more than 20% in the span of a few days.

“What I like about bitcoin is… its correlation to stocks and other assets is extraordinarily independent,” said Paulsen, who remains frustrated that he cannot own it for clients.

The promise of an asset class that behaves differently than stocks or bonds is leaving portfolio and wealth managers scrambling own cryptocurrencies if they can.

Many view bitcoin as a good inflation hedge. Nearly 20% of advisors are contemplating investing in cyryptocurrencies this year due to concerns about inflation, up from 6.3% in 2019, according to a report from Citi.

Still, a number of advisors say they are unable to own bitcoin for their clients until they can hold it in an exchange-traded fund or mutual fund that clears legal hurdles common for any investment.

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