Rich investors drawn to digital assets despite crypto crash

Four out of five of high net worth individuals (HNWIs) and family offices are already invested in digital assets and the majority of investors believe education and clearer regulation will drive greater adoption.

These findings emerged in Private Wealth in Digital Assets Study 2022, commissioned by blockchain company Matrixport and produced by FT Longitude, the specialist research and content marketing division of the Financial Times Group

Study respondents consisted of single and multi family offices, high net worth individuals (HNWI) and mass affluent individuals (MAI) across five international wealth management hubs, Singapore, Hong Kong, Taiwan, Australia and the United Kingdom.

The study found that 80 per cent of HNWIs and 70 per cent of family offices said they were either very interested or highly interested in digital assets and four out of five HNWI and family offices have been investing in digital assets in the past year. 

Less than seven per cent of HNWI and only 10 per cent of family offices were uninterested in investing in digital assets. Digital assets have also continued to attract the attention of MAI, catching up to other investor types in terms of interest in investing in the asset class. 

Eugene Lim, Head of Private Wealth at Matrixport, says: "Despite the gloomy market outlook, we have continued to see an influx of large investors in digital assets. Understanding the key factors encouraging investors to consider the asset class, and identifying gaps discouraging adoption, was our motive in commissioning the study. The report uncovers valuable insights about what's important in driving acceptance and legitimacy of the asset class, and what it takes for our industry to mature."

Rich investors become more familiar with digital assets

The majority of sophisticated and experimental investors, who hold up to 25 per cent or more of their assets in digital assets, indicated that their investment strategies are maturing as they become more familiar with digital assets. In particular, these investors seek a broader range of investment products that suit different risk profiles. In terms of channels to make their investments, they preferred digital asset-native intermediaries such as crypto asset managers over traditional wealth managers or banks.

All of those surveyed indicated they were looking for better ways to invest and identified easier technology platforms as the biggest factor influencing digital asset adoption. This finding highlights the importance of accessibility, akin to how smartphone-enabled mobile banking applications have transformed banking services. 

The study indicated that investors are looking at digital assets as a way to construct more resilient portfolios with some investors indicating that they were motivated by the potential that digital assets could offer better returns than traditional assets. Particularly, sophisticated investors and younger investors pointed out several push factors caused in part by traditional finance, which were increasing their appetite in digital assets — such as perceived abuse of government control through the banking system and debasement of paper currencies.

Laura Adcock, Group Editor, FT Longitude, says: "This study looks in depth at how investors think and feel about digital assets. It covers a unique year and gives us valuable perspective into investor sentiments before and after the crypto crash. In-depth interviews conducted with key industry stakeholders supplement the data with valuable qualitative insights, which has dramatically enhanced the quality of the narrative."