Friday, August 12, 2022

Wealthy Investors in Asia-Pacific Don’t Like Cryptocurrencies Much

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Cryptocurrencies account for less than 1% of the investment portfolio of high net worth (HNW) people in Asia-Pacific, despite significant holdings in alternative assets.

New figures from data and analytics company Global data found that alt investments account for 12% of the average HNW APAC investor’s portfolio, but after interest in crypto peaked in 2020, they unloaded it last year, leaving it only 0.7% of their assets matters.

Government crackdowns in countries like China are believed to be one of the main reasons why HNWs have dumped crypto.

GlobalData conducted the ‘Global Wealth Managers Survey Q2 2021’ with 360 wealth management managers in 19 countries to gather their insights. To be HNW Asset Allocation Analyticspublished last month revealed that the HNW investment segment in Asia-Pacific is allocating a significant portion of its investment to high-growth alternative investment products such as art and collectibles, private equity and cryptocurrencies.

APAC HNW investors gradually began to include cryptocurrencies in their portfolios ahead of the Covid-19 pandemic. However, the share of cryptocurrencies shot up in 2020 as the value of other asset classes fell.

Siddharth Agarwal, Director of Financial services at GlobalData, said that despite bitcoin more than 60% of its value in the past year, it is still 20 times higher compared to the price at the beginning of 2017.

“As a result, bitcoin and other cryptocurrencies have emerged as one of the popular alternative investment assets for modern high-risk investors in recent years,” he said.

“However, the share of cryptocurrencies in the portfolio composition of HNW individuals in Asia-Pacific shrank in 2021 as regulatory constraints in some of the Asian countries materially affected its desirability as an investment vehicle.”

Source: GlobalData

Agarwal said China effectively banned all transactions in cryptocurrencies in September 2021, and the phased ban, which arguably began in 2019, has stifled both a major source of demand for many currencies and a major mining center to mint new coins.

An outright ban on transactions in all forms of crypto in China in 2022 clearly impacted HNW’s investment portfolio, with a notable decline in the total share spent on cryptocurrencies, while current shifts in economic pressures such as inflation are likely to pay off. against additional interest,

“In addition, the recovery in share prices and the optimism in the first half of 2021 also played a role. Higher share prices have increased the share of shares in the HNW portfolio, which is already the largest component,” he said.

“GlobalData predicts that HNW investors in Asia-Pacific will look for alternatives in 2022 to counter the impact of rising inflation. However, the share of cryptocurrencies is unlikely to materially increase to 2020 levels.”

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