Bitmex Co-Founder Criticizes Former FTX CEO for Not Liquidating Hedge Fund Alameda

January 14, 2023 Bitcoin.com

Half of Asia’s affluent investors have crypto in their portfolio: Report

June 7, 2022 Coin Telegraph

affluent

This figure is expected to further balloon to 73% by the end of 2022, according to research from Accenture.

Affluent investors in Asia are neither shy nor ignorant about crypto, with research revealing that 52% of them held some form of a digital asset during Q1 2022.

According to research from Accenture published on June 6, digital assets, which include cryptocurrencies, stable coins, and crypto funds, made up on average 7% of the surveyed investors’ portfolios, making it the fifth-largest asset class for investors in Asia.

It was more than they allocated to foreign currencies, commodities, and collectibles, and in some cases was on par with or exceeded the amount invested in private equity/venture capital and hedge funds.

Accenture said the survey was conducted with more than 3,200 clients across China, Hong Kong, India, Indonesia, Japan, Malaysia, Singapore, and Thailand. The company defines an affluent investor as anyone that manages investable assets of between US$100,000 to $1 million.

Investors in Thailand and Indonesia had the largest percentage of digital assets in their portfolios compared to their peers.

Though half of the investors in Asia were already holding digital assets in Q1 2022, Accenture’s research indicates that a further 21% are expected to invest in them by the end of 2022, meaning as many as 73% of wealthy Asian investors could hold a digital asset by the end of the year.

“Digital assets represent a rare, clear industry white space with significant business opportunity.”

Wealth managers holding back

However, the firm found that wealth management firms, those that provide financial planning, tax, investment advice, and estate planning to their clients, have been slow to board the crypto train. 67% of wealth management firms said they have no plans to offer digital asset products or services.

“For wealth management firms, digital assets are a US$54bn revenue opportunity— that most are ignoring."

Wealth management firms cited a lack of belief and understanding of digital assets, a wait-and-see mindset, and the operational complexity of launching a digital asset offering as the main reason for holding back, leading them to prioritize other initiatives instead.

Accenture said the lack of engagement by firms means that investors have been forced to get their financial advice about crypto from unreliable sources.

“This lack of engagement by firms means many clients are seeking advice about digital assets on unregulated forums, including peer-to-peer advice on social media.”

However, Accenture has stressed the importance for wealth management firms to push forward into the digital asset space, or risk being left behind.

“While many firms are hesitant to enter the digital assets space, and for a range of reasons, their competitors have shown that success is possible.”

Asia’s investors have been warming up to crypto, particularly in the last year.

In April, a report by Gemini cryptocurrency exchange found that crypto adoption skyrocketed in 2021, particularly in countries such as India and Hong Kong. Around 45% of respondents in the Asia Pacific purchased their first crypto in 2021.

Uncollateralized Lending Platform Truefi Reveals $100 Million Single-Borrower Pool Designed for Blockchain.com

April 25, 2022 Bitcoin.com

Coinbase Unveils Crypto Investment Strategy Amid Shaky Macro Economic Environment

April 23, 2022 The Daily Hodl

Crypto exposure has positive impact on investment portfolios, study shows

October 7, 2021 Coin Telegraph

Coin Telegraph

The study also concluded that temporary crypto market decline and volatility are not enough to diminish the importance of cryptocurrencies in investment portfolios.

Allocating funds to crypto investment positions has been shown to have a positive impact on the performance of diversified investment portfolios.

According to a research study by crypto asset management outfits Iconic Funds and Cryptology Asset Group, the ability of crypto investments to positively impact the performance of investment portfolios cuts across several asset allocation models.

This ability to improve the profitability of diversified investment portfolios is even despite the volatility of cryptocurrencies, especially the recent market crash that occurred in May.

The research study titled: “Cryptocurrencies and the Sharpe Ratio of Traditional Investment Models” examined changes in the risk-return profile of several portfolio allocation methods due to the addition of cryptocurrency assets.

This risk-return examination was conducted via measuring changes in the Sharpe ratio — the measure of excess returns earned for holding a volatile asset — when crypto positions were included in the different asset portfolio models.

With crypto supposedly an uncorrelated asset class, the risk-reward performance of investment portfolios should improve with the addition of cryptocurrencies despite their apparent volatile price movements.

By assuming a passive investment strategy, the study mapped the changes in the Sharpe ratio for traditional portfolio models with the introduction of crypto exposure against a reference index with no cryptocurrency allocation.

*Source: Cryptocurrencies and the Sharpe Ratio of Traditional Investment Models*

To investigate the impact of increasing the crypto positions for each portfolio model, the study also rebalanced the cryptocurrency allocation on a 1%, 3% and 5% basis.

Detailing its findings, the study stated: “This report finds that the addition of cryptocurrencies to any portfolio covered had a positive impact on the returns as well as the risk-reward performance of the portfolio,” adding:

“This finding holds despite a significant correction in the crypto markets during the beginning of 2021. Furthermore, the addition of more cryptocurrencies led to even higher returns.”

According to the document, the results of the 2021 study also lend credence to the conclusions drawn in the 2020 research that showed the positive impact of crypto allocations to investment portfolios despite the market crash of mid-March (Black Thursday).

Crypto exposure is becoming a significant trend among institutional investors. As previously reported by Cointelegraph, a recent Bank of America report showed 20 major public companies in the United States having significant digital asset-based investments.

Back in September, a survey by European investment management outfit Nickel Digital Asset Management stated that 62% of global institutional investors with zero crypto exposure will begin making forays into cryptocurrency and blockchain within the next 12 months.

Fidelity Executive Believes Bitcoin’s Price ‘Bottom Is in’ After Last Month’s Market Carnage

June 15, 2021 Bitcoin.com

Big rise in financial advisers adding crypto assets to client portfolios

June 2, 2021 Coin Telegraph

Coin Telegraph

More than a quarter of financial advisers intend to recommend crypto investments over the next year.

According to a survey, financial advisers are recommending investments in Bitcoin and crypto assets to their clients more than ever before.

A report by the Financial Planning Association released on June 1 has taken a look at the changing attitudes towards crypto assets. The ‘2021 Trends in Investing Survey’ revealed that more financial advisers than ever are recommending their clients have some crypto in their portfolios.

The survey was conducted in March and received 529 online responses from professional financial advisers who offer clients investment advice and recommendations.

It stated that 14% of financial advisers have already added crypto assets to their clients’ portfolios or are recommending it to them. Even more are planning to do so over the next year.

“More than a quarter (26 percent) of advisers indicated in the 2021 survey that they plan to increase their use/recommendation of cryptocurrencies over the next 12 months.”

The survey revealed that the figure is up significantly from the previous year when less than 1% of advisers were recommending exposure to cryptocurrencies.

Furthermore, 49% of finance professionals indicated that, in the last six months, clients have asked them about investing in cryptocurrencies, a figure that has almost trebled from just 17% in 2020.

Just below half, or 48% of financial advisers, claimed to read occasional news stories on cryptocurrencies and are somewhat comfortable conversing about them, with a third of advisers actively educating themselves on digital assets.

Clients appear to be less concerned with market volatility this year compared to last, the survey found. More than half, or 52%, of financial advisers, stated that their clients inquired about market volatility over the past six months, compared to 76% for the previous year.

Investors may be drawn to crypto assets as a hedge against inflation which has been exacerbated during the pandemic and ongoing fiscal stimulus packages. Inflation in the U.S. is hovering around a 13 year high.

In early May, Cointelegraph reported that financial advisers have been leading an institutional push toward crypto asset adoption.

Grayscale CEO Michael Sonnenshein told Cointelegraph that, “Curiosity and demand from clients are driving financial adviser interest in crypto.” His observations were derived from a survey commissioned by the investment firm showing that more than half of advisers are receiving questions from their clients about cryptocurrencies.

Bubble or a drop in the ocean? Putting Bitcoin’s $1 trillion milestone into perspective

April 3, 2021 Coin Telegraph

<div>Bubble or a drop in the ocean? Putting Bitcoin's trillion milestone into perspective</div>

Bitcoin Price

Bitcoin is relatively small compared to stocks and real estate, and those holders might reinvest dividends in other assets.

On Feb. 19, Bitcoin's (BTC) market capitalization surpassed $1 trillion for the first time. While this was an exciting moment for investors, it also concerned investors that the asset is in a bubble.

Although a handful of listed companies ever achieved this feat, unlike gold, silver, and Bitcoin, stocks potentially generate earnings, which in turn can be used for buybacks, dividends, or developing additional sources of revenue.

On the other hand, as Bitcoin adoption increases, those same companies will likely be forced to move some of their cash positions to non-inflatable assets, ensuring demand for gold, silver and Bitcoin.

In fact, data shows that diversification between Bitcoin and traditional assets provides better risk-adjusted performance for investors, which is getting increasingly difficult for companies to ignore.

Bitcoin continuing to push above the trillion-dollar mark is also easy to overlook until one compares it to the market cap of other significant global assets. To date, less than ten tradable assets have achieved this feat.

*World’s 20 most profitable companies. Source: fortune.com*

As depicted above, the world's 44 most profitable companies combined generate more than $1 trillion in earnings per year. One must keep in mind that stockholders might as well reinvest their dividends into equities, but some of it might end up in Bitcoin.

$1 trillion is small compared to real estate markets

Corporate earnings are not the only flows that may trickle into scarce digital assets. Some analysts estimate that part of the real estate investment, especially those yielding less than inflation, will eventually migrate to riskier assets, including Bitcoin.

On the other hand, current holders of lucrative real estate assets might be willing to diversify. Considering the relatively scarce assets available, stocks, commodities, and Bitcoin are likely the beneficiaries of some of this inflow.

*Global real estate markets. Source: visualcapitalist.com*

According to the above chart, the global agricultural real estate is valued at $27 trillion. The U.S. Department of Agriculture estimates a return on farm equity at 4.2% for 2020. Albeit very raw data, considering there are multiple uses for agricultural real estate, it is quite feasible that the sector generates over $1 trillion per year.

As recently reported by Cointelegraph, there are 51.9 million individuals worldwide with $1 million or higher net worth, excluding debt. Despite representing only 1% of the adult population, they collectively hold $173.3 trillion. Even if those are unwilling to sell assets in exchange for BTC, an insignificant 0.6% annual return is enough to create $1 trillion.

If there's a bubble, Bitcoin is not alone

These numbers confirm how a $1 trillion market capitalization for Bitcoin should not be immediately considered a bubble.

Maybe those Bitcoin maximalists are correct, and global assets are heavily inflated due to a lack of scarce and secure options to store wealth. In this case, which doesn't seem obvious, a global-scale asset deflation would certainly limit BTC upside potential. Unless they somehow think a cryptocurrency can extrapolate global wealth, which seems odd.

Back to a more realistic worldview, the above comparison with equities, agricultural real estate, and global wealth also confirms how insignificant Ether's (ETH) current $244 billion capitalization is, let alone the remaining $610 billion in altcoins.

Assuming none of the corporate profits or real estate yield will be allocated to cryptocurrencies seems unlikely. Meanwhile, a mere $100 billion annual inflow for Bitcoin is five times higher than the $20.3 billion newly-minted coins per year at the current $59,500 price.

For example, $100 billion flowing into Bitcoin would only be 5% of the $1 trillion yearly corporate dividends and 5% from global wealth or agricultural real estate returns. Even though the impact on gold's $11 trillion market capitalization would be negligent, such allocations would certainly play a vital role in Bitcoin's path to becoming a multi-trillion dollar asset.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Portfolio