Wealthy market participants are flocking to this asset class in significant fashion. Investors that have waded into the cryptocurrency space in incremental fashion and those building currently-small grubstakes may find this encouraging.
That validation could be a long-term boon for cryptocurrency investing in a broader sense as well as exchange traded funds such as the Invesco Alerian Galaxy Crypto Economy ETF (SATO). The equity sleeve of SATO’s portfolio is comprised largely of crypto miners. Those are stocks whose fortunes are largely tied to price action in the digital assets these companies mine.
While wealthy investors are not perfect investors, their increased participation in digital currency markets could have positive implications. Indeed, their participation in the market is increasing. A recent survey by deVere Group indicated that 85% of investors with $1.28 million to $6.41 million in assets are invested in crypto. That’s up from 82% in the firm’s 2022 survey.
Rich Crypto Investors Could Help SATO
Interestingly, the percentage of wealthy investors in crypto increased in the months immediately following the crypto winter of 2022.
“The half year crypto poll reveals that, despite the crypto market delivering its worst performance since 2018 last year, 2023 has seen a remarkable turnaround for digital currencies,” noted deVere CEO Nigel Green.
That could be a sign that well-heeled market participants might see long-term upside for digital assets, including bitcoin. They could also be willing to wager that cryptocurrencies were punished too severely last year. That could also send a message to more investors that has long-term relevance in equity-based crypto strategies such as SATO.
Like bitcoin, ether, and other digital currencies, crypto stocks and ETFs like SATO are enjoying positive showings this year. That’s impressive when considering the regulatory environment in the U.S. remains trying and the Securities and Exchange Commission (SEC) continues dragging its heels on approval of a spot bitcoin ETF.
The current crypto backdrop isn’t overtly sanguine. However, registered investment advisors should realize that a broader swath of clients is interested in the asset class. As such, they should be prepared to discuss relevant ideas, such as SATO.
“Against this backdrop of the so-called ‘crypto winter’, and the macroeconomic headwinds, high-net-worth (clients) are consistently seeking advice from their financial advisors about including digital currencies into their portfolios, or increasing their exposure to them,” concluded deVere’s Green.
For more news, information, and analysis, visit the Crypto Channel.
VettaFi LLC (“VettaFi”) is the index provider for SATO, for which it receives an index licensing fee. However, SATO is not issued, sponsored, endorsed or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing or trading of SATO.
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