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Written by: George Prior
High net worth (HNW) investors have not lost any confidence in cryptocurrencies, despite the dismal so-called crypto winter of 2022, as the robust first half of year continues for the market.
85% of HNW clients have considered, or currently already are, investing in cryptocurrencies such as Bitcoin so far in 2023, according to a survey carried out by deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organizations.
The poll’s findings were up from 82% of the organisation’s HNW clients with between £1m and £5m of investable assets who sought advice on cryptocurrencies throughout 2022, as a whole.
Nigel Green, chief executive and founder of deVere Group, comments: “The half year crypto poll reveals that, despite the crypto market delivering its worst performance since 2018 last year, 2023 has seen a remarkable turnaround for digital currencies.
“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.
“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.”
Amongst other incidents, in May 2022, the TerraUSD and Luna stablecoins crashed, taking billions of dollars of investor equity down with it. The market was further rattled by the bankruptcy of crypto exchange FTX in November, which also wiped out billions of investor money. Allegations of financial wrongdoing were tabled against the firm’s leaders, including the company's founder Sam Bankman-Fried.
“It really was about as bad as it could’ve been for the crypto market last year. And 2023 has, so, far been characterised by the US Securities and Exchange Commission (SEC) ramping up oversight in the digital asset space.
“The fact, then, 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.”
The deVere CEO notes: “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.”
He added that despite the surveyed group being "typically more conservative," he believes the interest stems from Bitcoin’s core values of being "digital, global, and borderless.”
The deVere Group CEO also notes the cryptocurrency market is now experiencing “upside momentum due to global cooling inflation trends which will improve the outlook for risk-on assets.”
Wealthy individuals are not the only ones who have continued their crypto interest and holdings over the last year. Institutional investors, namely Wall Street giants are also forging ahead into the space.
Nigel Green concludes: “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.”
Related: Should You Follow the Big Money of Institutional Investors on Bitcoin’s Jump?