What are the world’s uber-rich doing when it comes to cryptocurrencies? A growing number of high- net-worth individuals are attracted to them.
More than one in five — 21% — of respondents in an annual survey of wealth advisers and private bankers said clients had increased their investments in cryptocurrencies in 2017, according to Knight Frank’s 2018 edition of its Wealth Report. The survey is based on responses from more than 500 private bankers and wealth advisers who collectively represent about 50,000 people with a combined wealth of more than $3 trillion.
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The geographical breakdown shows great variation in very rich people’s approaches to cryptocurrencies. Just 5% more Asia’s ultrawealthy increased their exposure to cryptocurrencies than those decreasing their exposure. On the other hand, 33% more ultrawealthy individuals in Latin America increased their exposure to cryptos than decreased it.
Here’s the breakdown of how exposure among ultrahigh-net-worth individuals to cryptos has changed in 2017:
|% difference between respondents reporting an increase in exposure to cryptocurrencies and those reporting a decrease in 2017|
|Russia and CIS countries||27%|
Asian governments have taken the sharpest stands on cryptocurrencies. At the end of 2017, the South Korean government proposed measures including a tax on cryptocurrency trades. Some reports have suggested that Seoul could ban all cryptocurrency trading. At one point at the end of 2017, South Korea accounted for as much as a quarter of all global bitcoin trading activity. In September, China banned all companies and individuals from raising funds through ICO activities.
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And many governments have issued warnings that cryptocurrencies are subject to lack of security. Even Apple
co-founder Steve Wozniak fell prey to a simple bitcoin scam, losing $70,000 to fraud
Despite all the conversation around cryptos, the ultrarich still prefer stocks and property over everything else. Some 62% of respondents said their clients had increased their exposure to equities in 2017, while 56% said clients increased their exposure to property.
The outlook on bitcoin
is mixed. Noted bitcoin bull Tom Lee predicts the cryptocurrency will hit $125,000 by 2022, while Vanguard’s chief economist recently wrote that he sees “a decent probability that its price goes to zero.” Perhaps the most bullish of them all is Tyler Winkelvoss, who said that those who can’t see bitcoin at $320,000 merely “lack imagination.”
Major cryptocurrencies fell sharply Wednesday as reports of a system errors at a popular exchange platform appeared to unsettle investors. The No. 1 digital currency, bitcoin, fell more than $1,000 to an intraday low of $9,468.45. Ether was down 10.2% at $731.77. Bitcoin Cash was off 13.5% at $1,043.79. Litecoin remains under $200, trading at $175.65, down 10.7%.
Futures markets followed suit Wednesday, with the Cboe Global Markets March contract
down 11.5% at $9,490 and the CME Group Inc. March contract
down 9.8% at $9,605.
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MarketWatch reporter Aaron Hankin contributed to this report.