The current crypto narrative for success holds as a primary principle the fact that demand for cryptos will ignite when the floodgates are open for institutional investors to participate in crypto financial markets. An “institutional investor” can be many things, including banks, pension funds, hedge funds, commingled funds, family offices, and, which is often overlooked, high net-worth individuals. These different groups, however, have one thing in common – hundreds of millions of dollars of assets to manage. The news today is that 68% of this last group intends to own cryptos by 2022.
The first of several surveys came from the Dubai-based deVere Group, an independent financial advisory organization. The firm polled 700 of its clients, who resided across the global landscape, including the U.S., the U.K., Australia, Qatar, Switzerland, Spain, and Germany. The firm only contacted a sub-set of its entire customer base, those high net-worth individuals with over £1 million ($1.3 million) worth of invest-able assets.
The big headline message, according to Irish Tech News: “68% of the survey’s respondents revealed they have invested or will invest in cryptocurrencies like bitcoin, ether, or XRP before the end of 2022.” A similar survey conducted by the firm in June of last year produced a 35% figure, thereby suggesting that high net-worth individuals have nearly doubled their supportive ranks for cryptos in just twelve months time.
Nigel Green, the founder and CEO of the deVere Group, noted:
Wealthy individuals are increasingly seeking exposure to cryptocurrencies. Cryptocurrencies are the future of money. Crypto is to money what Amazon was to retail. High-net-worth individuals aren’t prepared to miss out on this and are rebalancing their investment portfolios towards digital assets. Those surveyed clearly will not want to be the last one on the boat.
In two other related surveys, eToro found that:
71% of millennials would invest in crypto, if it was offered by traditional financial institutions.” High net-worth individuals do follow the trends of the young. In a more circulated study, Greenwich Associated, on behalf of Fidelity Investments, conducted a survey of its high net-worth base of customers.
Fidelity noted:
Almost half of the institutional investors surveyed (47%) view digital assets as having a place in their investment portfolios, but opinions vary on how these investors would prefer to hold digital assets in the future. 76% of respondents deemed security as their top priority when considering custodial solutions.
Not all institutional investors are sitting on the sidelines, waiting for the right time to jump into the cryptocurrency fray. Analytical research of blockchain activity was recently published that indicated that institutional investors already owned 7% of the total crypto-verse of various token offerings. This figure pales by several multiples in comparison to similar participation rates in equity and fixed income/bond fund securities.
The “First Principle” of Crypto-Land appears to still hold. When the institutional group of investors, which has already bought into the idea of adding cryptos to their respective portfolios, decides the time is right to start buying Bitcoin and its altcoin brethren at will, it, perhaps, will open a floodgate of new capital to buy at market prices. With existing limits on the supplies of invest-able tokens, this tsunami of demand could overwhelm exchanges. Does the world “parabolic” come to mind under these circumstances?