SMSF interest in bitcoin investment has grown and this path is set to continue as cash, term deposits and bonds lose appeal, a cryptocurrency investment expert has said.
“We’ve seen 53 per cent more SMSF applications in the last three months than we did in the whole of last year, a trend we expect to continue as SMSFs look to diversify their portfolios,” Cointree chief executive Shane Stevenson said
“There’s no doubt that bitcoin is now being seen as an alternative to gold as a store of value, reflected recently by the rising price of bitcoin in particular, and the fact that cash, term deposits and bonds have less appeal because of the historically low interest rates, that cryptocurrencies are becoming more attractive to SMSFs,” he added.
According to Stevenson, how SMSFs chose to invest in cryptocurrency tended to depend on a number of factors including whether the fund was in accumulation or pension phase and the fund’s risk profile.
“For those in the accumulation phase, we are finding investors and SMSFs are more prepared to take a bigger risk as their focus is on growing their funds under management, while for those in retirement phase, it’s a far more cautious approach with cryptocurrencies typically a smaller percentage of their portfolios,” he observed.
“Either way, when investing in the accumulation or retirement phase, the key theme we’re seeing is that the investment dovetails with the goals of the fund and aligns with their investment strategy.”
Stevenson pointed out the relative newness of cryptocurrency as an asset class posed its own set of challenges for SMSFs seeking it as an investment option, but noted barriers such as limited cryptocurrency investment experience among financial advisers would not hinder the growing trend.
“There are still hurdles limiting SMSFs from investing in cryptocurrency. It’s a relatively new asset class and many financial advisers lack experience with this type of investing. But this is changing. Cryptocurrency is proving to be an attractive option for many SMSFs that have done their research and are comfortable with the risk,” he said.
In December, Kraken Australia managing director Jonathon Miller said SMSF investors considering investing in bitcoin should not be deterred by the volatile nature of cryptocurrency as seen as recently as three years ago.
