6 reasons HNWIs are investing in crypto assets

Most are or plan to be invested in cryptocurrencies within 3 years

6 reasons HNWIs are investing in crypto assets
Steve Randall

Despite volatility in the value of cryptocurrencies, concerns about the industry itself, and the interest of the CRA and other authorities; most high-net-worth individuals are, or are planning to be, invested in the digital assets by 2022.

A global survey by financial advisory firm deVere Group reveals that two thirds of HNWIs will hold crypto assets within the next three years – with some emerging trends driving their interest including a fear of missing out.

“There is growing, universal acceptance that cryptocurrencies are the future of money – and the future is now,” said deVere founder and CEO Nigel Green. “High net worth individuals are not prepared to miss out on this and are rebalancing their investment portfolios towards these digital assets.”

He believes that cryptocurrencies are to money what Amazon was to retail and the wealthiest investors don’t want to be left on the sidelines.

But there are some other key reasons why HNWIs are keen on cryptos according to Green.

“First, cryptocurrencies are borderless, making them perfectly suited to an ever-globalised world of commerce, trade, and people. Second, they are digital, making them perfectly suited for the increasing digitalization of our world, which is often called the fourth industrial revolution,” he said.

Then there’s the ability of cryptocurrencies to provide solutions for real-life issues such as the efficiency of international payments and to help the world’s ‘unbanked’ population, estimated to be around 2 billion.

Green says demographics are on the side of cryptocurrencies as younger people are more likely to embrace them than older generations. This is a point made recently by advisors who say FAs could miss out on next-gen clients if they fail to consider crypto assets.

Finally, the interest of institutional investors is a driver as they bring both their capital and their expertise to the market.

Bitcoin hits 6-month high
The deVere leader’s positive tone comes as Bitcoin, the leading and best-known cryptocurrency hit a 6-month high having surged more than 50% since the start of the year.

The currency jumped 7% on Friday to $5,750 according to Coindesk and Green believes it will break through the $6K barrier imminently, adding confidence in the market.

“Once this confidence is in place, the sky is the limit for cryptocurrencies, which are increasingly accepted by both retail and institutional investors as the future of money,” he said. “The global poll underscores a justified international surge in crypto-optimism.”

Buffett remains skeptical
One high-profile wealthy investor who will be unlikely to join the majority of survey respondents in investing in cryptos is Warren Buffett.

He told CNBC on Friday that Bitcoin is “a gambling device... there’s been a lot of frauds connected with it.”

However, he does think that the underlying blockchain technology does have value; although he is bullish on that industry too.

“We are probably doing it indirectly, but no, I wouldn’t be the person to be a big leader in blockchain,” he told CNBC.

Watch CNBC's full interview with Warren Buffett at Berkshire Hathaway's investor event from CNBC.