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(Kitco News) – While the 2022 crypto market downturn that wiped $2 trillion in value out of the total cryptocurrency market capitalization may have misdirected many into the nascent asset class, high net worth (HNW) individuals saw it as a good opportunity to start researching the sector and gain exposure while prices were low.
According to the results According to a study published Monday by the deVere Group, an independent financial advisory organization, 82% of clients with between £1 million and £5 million of investable assets sought advice on cryptocurrency from their advisors in the past 12 months.
“In 2022, the crypto market had its worst performance since 2018, with Bitcoin, the headline-grabbing market leader, dropping around 75% for the year. The price declines came as investors reduced their exposure to risky assets, including stocks and cryptocurrencies, due to heightened concerns about inflation and slower economic growth,” said Nigel Green, CEO and founder of deVere Group. “However, against this backdrop of the so-called ‘crypto winter’, HNWs were constantly seeking advice from their financial advisors on including digital currencies in their portfolios.”
Green went on to note that while HNW individuals tend to be more conservative, they were not deterred by adverse market conditions and were looking to initiate or increase their exposure to cryptocurrencies.
“This suggests that these high net worth clients are becoming more aware of the inherent characteristics of cryptocurrencies like Bitcoin, which have the core values of being digital, global, borderless, decentralized and tamper-proof,” Green said. “Wealthy investors understand that digital currencies are the future of money and they don’t want to stay in the past.”
Bitcoin’s performance so far in 2023 has only served to increase HNW customer interest in the cryptocurrency market, as major legacy financial institutions such as JPMorgan, black rock Y BNY Mellon They have started offering crypto-related services to their clients.
“The world’s largest cryptocurrency is up more than 40% since the turn of the year, and this will not go unnoticed by HNW clients and others who want to build wealth for the future,” Geen said. “Should the HNWs express such great interest in the 2022 bear market, as market conditions steadily improve, they will be among the first to capitalize on the next bull run.”
Data shows that the influx has already begun
Evidence that interest from institutional and retail investors is on the rise was also reflected in the latest “Digital Asset Fund Flow Reportfrom European cryptocurrency investment firm CoinShares, which showed that investments in digital assets saw a surge in inflows last week, reaching $117 million, the highest level since July 2022.
Bitcoin was the main focus of investment, with $116 million in inflows for the week, while multi-asset investment products saw their ninth consecutive week of outflows with a total of $6.4 million drawn from these investment products. This suggests that investors currently prefer select investments, CoinShares said.
Investors in Germany accounted for 40% of all inflows ($46m), followed by Canada ($30m), the US ($26m) and Switzerland ($23m). Total assets under management (AuM) for all investment products now stands at $28 billion, up 43% from November lows.
Investment product volumes have also been on the rise, with $1.3bn traded last week, an increase of 17% compared to the YTD average, while the broader digital asset market has seen an average increase in weekly volumes of 11%, CoinShares said.
While retail traders can invest in these products, institutional investors make up the bulk of the investments, offering compliant paths to gain exposure to digital assets. Investment products currently make up just 1.4% of total volume on trusted exchanges.
The report also showed $4.4 million worth of inflows into short bitcoin positions, meaning investor opinion “remains polarized,” CoinShares wrote.
Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a request to make any exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept responsibility for loss and/or damage arising from the use of this publication.
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