Category: crypto

Affluent Asian investors add crypto to portfolios

On By mehranmuslimiblogIn cryptoLeave a comment

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 affluent Asian investors’ portfolios. And 52% of the surveyed investors hold some form of digital asset. An ‘affluent investor’ is defined as anyone that manages investable assets of between US$100,000 to $1 million.

This makes crypto the fifth-largest asset class for investors in Asia, and exceeds their portfolio allocations for foreign currencies, commodities, and collectibles. For some of the investors their crypto holdings were on a par with the amount they invest in private equity/venture capital and hedge funds.

The investors taking part in the survey numbered 3,200 and were located in China, Hong Kong, India, Indonesia, Japan, Malaysia, Singapore, and Thailand. Significantly, the investors with the largest proportion of digital assets were in Indonesia and Thailand.

Some of the investors already held crypto in their portfolios in Q1 2022, but the research highlights the fact that a further 21% are expected to have invested in them by the end of this year, which would push the percentage of wealthy Asian investors holding digital assets up to 73%.

Wealth management firms shy away from digital assets

On the other hand, Accenture’s study showed that wealth management firms have been slow to embrace digital assets, and 67% of them said they had no plans to offer digital asset products or services to their clients. The reasons they gave for ignoring a $54 billion revenue opportunity were as follows: a lack of belief and understanding of digital assets, a wait-and-see mindset, and the operational complexity of launching a digital asset. This leads them to advise their clients to prioritise other products. However Accenture claims this has left investors seeking advice about cryptocurrencies from less reliable sources. It also warned that if wealth management firms didn’t get on board with the digital asset space, they risk being left behind. The 9% of these firms that do offer digital assets have shown that success is possible.

The Accenture report is not the only one indicating a ‘warming’ amongst Asian investors towards digital assets. A Gemini cryptocurrency report published in April, found that crypto adoption skyrocketed in 2021, particularly in countries such as India and Hong Kong. Plus, around 45% of respondents in the Asia Pacific region purchased their first crypto in 2021.

Young investors keep the faith with crypto

On By mehranmuslimiblogIn Bitcoin, Blockchain, cryptoLeave a comment

Those investors who arrived recently to crypto investing are feeling anxious, especially if they bought in during 2021 when Bitcoin and Ethereum were reaching dizzy all time highs. Since then the market has dropped by around 50%. Market commentators worried that new retail investors might be lost forever because of this. Eben Burr, president of Toews Asset Management told Reuters, “If the market decline continues, it will become too painful and retail investors will bail.” However, that doesn’t appear to be the case, especially with the youngest retail investors.

According to Callie Cox, investment analyst at eToro in the USA, the current correction hasn’t deterred the younger investors: “We surveyed 1,000 investors across age groups in March, and 58% of investors ages 18–34 thought Bitcoin would present the best buying opportunity in crypto over the next three months.”

This is surprising, given that Glassnode reported that in May 40% of Bitcoin holders were underwater on their investments at a time when BTC was $33,800. So, are younger investors still as optimistic as they were in March? Bobby Zagotta, CEO of Bitstamp USA, said, “Retail traders between 35-45 years old decreased their crypto balances amid market volatility in the last few weeks. By contrast, our younger users seem to be more bullish and have chosen not to sell.” 

Younger people are more optimistic

Is this because younger people are generally more optimistic? A 2021 research study on crypto investors’ beliefs, found that “younger individuals with lower income are more optimistic about the future value of cryptocurrencies, as are late investors.” Cristina Guglielmetti, financial adviser and president of Future Perfect Planning discussed first-time retail investors with Cointelegraph, saying: “The clients I have who own cryptocurrency haven’t really sold their holdings from last year to this year. They’re looking at it more as an educational experience and not assigning an expected return per se. They’re expecting it to be speculative and very volatile.”

Another question on some minds is whether the market can attract new investors. Bobby Zagotta said, “Headlines might have you believe that there’s more volatility than there really is and that investors are fleeing when prices fluctuate. But, that’s not really happening.” Etoro’s Cox added that 42%  percent of investors surveyed by eToro in March said they don’t buy crypto because they simply don’t know enough about it: “But, the appetite for decentralization and digital transformation is still there, especially among younger investors.” She believes the reason for this is “younger investors naturally have higher risk appetites, and they’ve seemed willing to stomach these swings because of their longer-term optimism about the technology.” Ultimately, Cox says, “We haven’t seen investors abandon the crypto space en masse, but we have seen them become more selective of what crypto they buy.”

Coinbase creates ‘crypto native think tank’

On By mehranmuslimiblogIn Bitcoin, crypto, RegulationsLeave a comment

In a bid to be on the inside track when it comes to shaping polices for digital assets, Coinbase, a leading cryptocurrency exchange, has created a “crypto native think tank “to help shape the global conversation around policies for digital assets,” Cointelegraph reports. The new think tank will also publish research on Web 3.0, in addition to crypto.

The policy research department is to be headed by Hermine Wong, its current Director of Policy. She previously served in the Division of Economic and Risk Analysis at the United States Securities and Exchange Commission (SEC) and before that worked at the Department of State.

At the same time Coinbase has formed a Coinbase Institute Advisory Board with academics across law and finance from top universities such as Harvard, MIT, Duke and John Hopkins. It also has an academic partnership with the University of Michigan, which will partner with Coinbase on an annual U.S. based survey measuring the adoption of cryptocurrencies, as well as sentiment towards them. Its first publication, a “Crypto and the Climate” report is published today, 19th May.  It looks into the energy use of proof-of-work blockchains like Bitcoin.

It has also released today its first monthly insight report into crypto markets, comparing market movements in crypto and traditional finance. The formation of the institute is another example of Coinbase aiming to influence the conversation around cryptocurrencies, something it has done in the past with the launch last May of a fact checking blog “to combat misinformation and mischaracterizations about Coinbase or crypto being shared in the world.”

Coinbase also spent over $1.3bn lobbying in 2021, and created a political action committee in February 2022, ahead of the November midterm elections in the USA.

A crash is an opportunity, not a disaster

On By mehranmuslimiblogIn Altcoins, cryptoLeave a comment

It’s hard not to panic when you’re surrounded by extreme fear. Yet some manage to see the bigger picture and don’t allow themselves to be swayed by the current fallout in the crypto markets. Arca, a crypto hedge fund is one of those.

Arca manages $500 million in assets, and is one f the firms likely to be feeling the squeeze from the sudden and dramatic collapse of the Terra blockchain’s LUNA-powered stablecoin, UST. It also runs a Digital Assets Fund, in which LUNA is a core holding, according to the note.

Yet it sent a note out on Tuesday this week saying that it had held an ad hoc investment and risk committee meeting to discuss the situation.

This came after UST fell to a low of 63 cents and LUNA was trading at $24.60 on Monday. By Wednesday, UST was still at 63 cents, but LUNA had dramatically fallen below $1.15.

Arca’s response may come as a surprise to some, but not to all. In the note published Tuesday, Arca’s CEO Rayne Steinberg said, “After this analysis, we felt, and continue to feel, that UST will ultimately maintain its peg and a number of attractive opportunities had become available. For example, we were able to purchase UST at a significant discount to par in the DYF (Digital Yield Fund) and then deposit with FTX who were paying 100% APY (annual percentage yield) given the buyer/seller imbalance during peak fear.”

Steinberg added, “We have significant experience in distressed situations from 2008/2009 up to and including SUSHI and LEO (Bitfinex) in recent years. We welcome these opportunities to be buyers when others are fearful.”

And in a similar story, three funds of Cathie Wood’s ARK Investment Management bought a combined total of 546,579 shares of Coinbase Global (COIN). Coinbase shares were down 26.4% to $52.35 in post-market trading on Wednesday.

Although the ‘extreme fear’ meter must be going off the scale right now for crypto investors, the moves by Arca and Ark demonstrate that belief is still strong. They see it as an opportunity to buy at a discount – there are bound to be many others who think the same way. Crypto is not over, no matter what some might say.