71% HNIs Into Digital Assets, But Allocate Just 14% Portfolio To Alternative Investment

A whopping 71 per cent of wealthy individuals have invested in digital assets, a recent survey by Capgemini, a France-based technology consulting firm has revealed.

For the Wealth World Report, Capgemini surveyed over 2,973 global High Net-Worth Individuals (HNIs), out of which 54 per cent owned wealth ranging from $1 million to $30 million, and 46 per cent possessed a wealth of $30 million and over.

The study took into account the respondents’ preferences for several investment classes, including digital assets, related exchange-traded funds (ETFs), non-fungible tokens (NFTs), and items related to the metaverse. 

Findings further revealed that every seventh wealthy individual who invested in digital assets was below 40 years of age.

The findings by Capgemini follows similar studies by Accenture, which found that in Q1 2022, 52 per cent of wealthy Asian investors held some type of digital asset, accounting for 7 per cent of the holdings of the surveyed investors.

But Accenture also discovered that the majority of wealth management companies do not intend to provide any exposure to digital assets or associated services. These firms have been slow to adapt to the new digital currency landscape and adopt investment products with crypto.

The report further noted that HNIs’ holdings don’t primarily consist of cryptocurrency. They typically only allocate 14 per cent of their portfolios to alternative assets, such as private equity, hedge funds, and cryptocurrencies.

“The influx of new investment avenues, such as sustainable investing and digital assets is having a crucial impact on the wealth management industry. Wealth management firms must prioritise providing timely education around this trend to retain their customers,” says Nilesh Vaidya, Capgemini’s head of retail wealth management.

Recently, Crypto Winter has hit investors hard. The worldwide cryptocurrency market valuation has dropped by roughly $1 trillion in 2022, and almost all leading coins are now worth half or less than their all-time highs.

Two days after plunging below $25,000, Bitcoin is down to around $20,000. The price of Bitcoin plunged to $20,810.18, down 9 per cent, and Ethereum fell 11.52 per cent at $1,097.99 at 1.28 pm on Wednesday. The price of Bitcoin (BTC) plunged below $25,000 on Monday from $64,000 in 2021. Ethereum (ETH), the second-largest cryptocurrency in the world, fell more than 8 per cent to $1,311 from $4,735 in September 2021, its lowest since March 2021.

Crypto experts Outlook Money spoke to have also said that equity and crypto markets have been in a tailspin on the fears of lingering inflation. Recent numbers from the US Bureau of Labor and Statistics peg inflation at a four-decade high of 8.6 per cent. More interest rate hikes would be needed to tame inflation, bringing more fragility and uncertainty in the markets.