They may appeal to the young, hip and edgy but cryptocurrencies are also surprisingly popular with super wealthy investors, according to a survey.
So-called High Net Worth (HNW) investors have not been put off by the crypto winter of 2022 when prices in all major cryptocurrencies fell. At the same time the robust performance the crypto-market put in during the first of the first half of the year is set to to continue.
A survey by financial consultancy, deVere Group, found that 85% of HNW clients have considered, or currently already are, investing in cryptocurrencies such as Bitcoin so far in 2023.
This was up from 82% of the organisation’s HNW clients with between £1m and £5m of investable assets who sought advice on cryptocurrencies throughout 2022.
Nigel Green, chief executive and founder of deVere Group, said that the poll showed that despite the crypto market delivering its worst performance since 2018 last year, 2023 has seen a remarkable turnaround for digital currencies.
Buoyant
Green said: “This sustained market bounce is quite incredible considering just how dark the 2022 crypto market was, with a string of serious headline-grabbing events triggering a domino effect of financial losses that led to a shattering of investor confidence in cryptocurrencies.”
He added: “Last year’s price drops also came as investors reduced their exposure to risk-on assets, including stocks and crypto, due to heightened concerns about inflation and slower economic growth.”
In May 2022, the TerraUSD and Luna stablecoins tumbled, taking billions of dollars of investor equity down with it. The market was also spooked when crypto exchange FTX went bankrupt in November, taking with it billions of investors pounds.
The fact that 2023 has been noteworthy of an increase in digital asset market oversight by the US Securities and Exchange Commission underlined just how strongly crypto assets’ performance had been this year, Green noted.
He said: “The fact, then, that Bitcoin has gained 80% already in 2023, putting it on track for its best annual performance since 2020, and that Ethereum prices are also up 52% so far this year, is truly impressive.”
Green added: “Against this backdrop of the so-called ‘crypto winter’, and the macroeconomic headwinds, HNWs are consistently seeking advice from their financial advisors about including digital currencies into their portfolios, or increasing their exposure to them.”
Even though the surveyed group is typically more conservative, the attraction of Bitcoin derives from its core values of being digital, global, and borderless, Green said.
Upside momentum
Cooling global inflation trends also mean that the cryptocurrency market is also now enjoying the benefit of upside momentum, which will improve the outlook for risk-on assets like digital currencies.
But it isn’t only super wealthy individuals who are giving cryptocurrencies their seal of approval and sinking their cash into the market. Institutional investors, including Wall Street behemoths, are now also piling into the space. At the moment, the crypto outlook appears to be a sunny one.
Green said: “If HNWs are continuing to express such huge interest in crypto, as market conditions steadily improve, they’re going to be amongst the first to capitalise on the anticipated continued price rises of the major digital currencies.”
