Ultra-Rich Investing More in Cryptocurrencies

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Ultra-Rich Investing More in Cryptocurrencies

Despite a gap in the group’s understanding of the asset class, the world’s richest investors are increasingly trying to boost their holdings in risky digital currency. According to Knight Frank’s most recent annual WealthReport poll, 21% of wealth advisors and private bankers claimed their customers boosted their investments in cryptocurrencies in 2017, but “there’s still a significant amount of confusion” around the blockchain-enabled technology. (See also: Crypto, Cannabis, and Fear of Missing Out Drive New Investor Inflow.)

In an interview with CNBC on Wednesday, Nicholas Holt, Knight Frank’s director of research for Asia Pacific, said, “while individuals are jumping on the bandwagon about investing in cryptocurrencies, maybe there isn’t a comprehensive grasp of what this might entail to their wealth portfolio.”

Crypto bearish have advised against investing in digital currency such as bitcoin, the world’s biggest cryptocurrency by market capitalization, owing to the extremely speculative character of its market, implying that investors are purchasing on the craze rather than the asset’s inherent worth.

Stocks and Property Still Preferred Among World’s Wealthiest Individuals

According to Knight Frank’s analysis, even the most wealthy cryptocurrency investors are unaware with blockchain, the technology behind bitcoin that enables transactions to be recorded and preserved.

In recent months, crypto markets have seen growing government regulation, including a few outright prohibitions on trading digital currency, as well as unfavorable remarks from crypto doubters such as Warren Buffett of Berkshire Hathaway Inc. (BRK.A) and Jamie Dimon of JPMorgan Chase & Co. (JPM). Despite the criticism, digital currencies such as bitcoin, ethereum, and ripple have made inroads into the mainstream, scoring a huge victory with their launch on the US futures market.

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While cryptocurrencies such as bitcoin have gained popularity, a recent research revealed that ultra-rich clientele continue to prefer investing in stocks and real estate.

“That’s hardly unexpected given how well stocks performed last year,” said Holt. “And real estate continues to be the cornerstone of the most rich individuals’ portfolios, accounting for up to 50% of many portfolios.” (See also: Bitcoin Is ‘Far’ From Becoming Mainstream, According to BlackRock.)

Investing in cryptocurrencies and Initial Coin Offerings (“ICOs”) is very dangerous and speculative, and this article is not a suggestion byInvestopedia or the author to do so. Because every person’s circumstance is different, a knowledgeable specialist should always be contacted before making any financial choices. Investopedia makes no claims or guarantees about the accuracy or timeliness of the information provided in this publication. The author owns cryptocurrencies as of the day this post was published.

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