Cryptocurrencies account for lower than 1% of the funding portfolio of high-net value (HNW) individuals in Asia-Pacific, regardless of appreciable holdings in different belongings.
New figures from information and analytics firm GlobalData discovered that alt investments account for 12% of the common HNW APAC investor’s portfolio, however after curiosity in crypto peaked in 2020, they offloaded it final yr so it makes up simply 0.7% of their belongings.
Authorities crackdowns in international locations comparable to China are believed to be one the important thing causes HNWs have ditched crypto.
GlobalData performed the ‘International Wealth Managers Survey Q2 2021’ with 360 wealth administration executives throughout 19 international locations to collect their insights. Its HNW Asset Allocation Analytics, printed final month, revealed that HNW investor phase in Asia-Pacific allocates a sizeable portion of funding in the direction of excessive progress different funding merchandise comparable to artwork and collectibles, non-public fairness, and cryptocurrencies.
APAC HNW buyers progressively begun to incorporate cryptocurrencies of their portfolio previous to the COVID-19 pandemic. Nonetheless, the share of cryptocurrencies shot up in 2020 as the worth of different asset lessons declined.
Siddharth Agarwal, Director of Monetary Companies at GlobalData, mentioned that regardless of bitcoin greater than 60% of its worth within the final yr, it’s nonetheless 20-fold greater in comparison with the early 2017 worth.
“In consequence, bitcoin and different cryptocurrencies have emerged as one of many fashionable different funding belongings for high-risk trendy buyers lately,” he mentioned.
“Nonetheless, the share of cryptocurrencies within the portfolio composition of HNW people in Asia-Pacific shrank in 2021 as regulatory restrictions in a few of the Asian international locations materially affecting its desirability as an funding car.”
Agarwal mentioned China successfully banned all transactions in cryptocurrencies in September 2021, and its phased banning, arguably began in 2019, has choked off each a key supply of demand for a lot of currencies and a most important centre of mining to mint new cash.
An outright banning of transactions in all types of crypto in China in 2022 clearly had an influence on HNW funding portfolio, with a notable decline within the general share dedicated to cryptocurrencies, whereas present shifts in financial pressures comparable to inflation are prone to pay in opposition to extra curiosity,
“Moreover, the restoration in inventory costs and optimism within the first half of 2021 additionally performed a job. Larger inventory costs have elevated the share of equities within the HNW portfolio, already its largest part,” he mentioned.
“GlobalData predicts HNW buyers in Asia-Pacific to load up on options in 2022 to counter the influence of rising inflation. Nonetheless, it’s unlikely to materially increase the share of cryptocurrencies again to 2020 ranges.”