Elon Musk said that in addition to the stock of his company, Tesla and SpaceX, cryptocurrencies are the main source of investment.
According to consulting firm Wealth-X, by 2020, the number of people with a net worth of about $5 million to $30 million in the world will increase by 1.7% to 295,450. The group’s combined asset value rose 2 percent to $35.5 trillion.
Observing the investments of wealthy individuals and organizations will be extremely helpful. They have access to proprietary information and analysis to decide their investment. At the same time, behind each investment is usually a team of experts, employees of family companies and asset managers to advise them.
Because of world political instability and rising Inflation in many places, 2021 has been a transformative year for the wealthy: they are looking for new points of investment growth.
Traditional assets that often determine the value of a family line or an organization – such as real estate, securities, deposits – are under great pressure. According to economist Ziad Abdelnour, 70% of wealthy families in the U.S. often lose their wealth in the second generation, and 90% lose their wealth by the third generation.
In 2022, the world faces a major problem related to the conflict between Russia and Ukraine and tensions in the Middle East. Rising inflation, the price of gold, wheat, oil, palladium and other commodities, and general economic instability in many countries are prompting the rich to promptly invest in cryptocurrencies.
Representatives of the long-established rich and the newly rich often have different views on cryptocurrencies. For example, Elon Musk said that in addition to the stock of his company, Tesla and SpaceX, cryptocurrencies are the main source of investment.
However, most millionaires of the previous generation continue to take a cautious view and even express publicly negative views on cryptocurrencies. Charlie Munger, an American billionaire investor and deputy ceo of Berkshire Hathaway, said that Bitcoin is “disgusting and opposed to the concerns of civilization.” Lloyd Blankfein, former Senior President at Goldman Sachs, says that Bitcoin is not a useful means of preserving capital because of its volatility.
However, many U.S. asset managers have been involved in the heat of the cryptocurrency industry. JPMorgan, Goldman Sachs and other major investment firms have also carried out extensive studies of cryptocurrencies — mainly Bitcoin (BTC) and Ether (ETH) — and even predicted changes in the value of cryptocurrencies.
Supporters of cryptocurrencies
The core philosophy of the cryptocurrency movement is decentralization, which is consistent with the views of millennial entrepreneurs. According to Wealth-X, contrary to conventional notions of wealth, most super-rich individuals around the world (84%) are self-reliant, meaning they achieve success through education and hard work.
The majority of the wealthy 90% who are interested in cryptocurrencies create their own wealth, with only 0.5% relying entirely on inheritance.
Self-reliant individuals are more accustomed to taking risks and more open to the volatile nature of cryptocurrencies than members of clans that have been rich for two or three generations. The average age of the world’s rich is just over 60, and the average age of wealthy people interested in cryptocurrencies is 53.7.
Tim Frost, founder and CEO of digital asset platform Yield App, said that, according to the company’s frequent flyer survey, “The majority of users are between the ages of 25 and 45, but Yield App has thousands of users aged 50 and over around the world.”
According to Wealth-X, the common characteristic of millionaires investing in cryptocurrencies is their interest in technology and charitable activities.
The resistance of the long-established rich and traditional methods of money management to cryptocurrencies is waning. The cryptocurrency industry is having a detrimental impact on instruments that were once considered financial machines such as stocks, bonds and real estate. Nowadays, ignoring cryptocurrencies is becoming more and more useless. The statements of Munger and Blankfein, even those who share the same ideology, are considered meaningless grunts.
Banks in Switzerland have an excellent reputation for safety and anonymity. For centuries, the super-rich have chosen the Swiss banking system as a place to store and manage assets. The reliability of banks in Switzerland is comparable to the reliability of Swiss watches.
Carole Morgenthaler, a representative of Swiss private bank Lombard Odier, commented that the bank’s investment confidence is based on long-term development and stability to ensure that customers’ assets can grow and pass on to future generations. She added, “Investing in cryptocurrencies now has no such properties and guarantees.”
Despite its cautious views on cryptocurrencies, the bank is currently collaborating with blockchain technology companies, namely Taurus and Wecan Comply, which are “researching this technology.”
It is possible that the conservative banking system in Switzerland is in no hurry to accept cryptocurrencies, but they are certainly watching and observing to understand the industry.
Cryptocurrencies are not a suitable investment for everyone. It will probably take some time until the cryptocurrency market is “organized” enough for the most conservative investors, who prefer gold and traditional real estate, to really pay attention to it. This market will have to become more predictable and stable, eliminating the downsides that ultraconservative investors are using to combat it.