Once seen as the province of nerds and computer geeks, Bitcoin has been gaining wider acceptance and many investors are speculating it will shake up the financial world. The best-known cryptocurrency has reached a series of records in 2021—just three years after its price collapsed—after endorsements from the likes of Paul Tudor Jones, Stan Druckenmiller and Elon Musk.
Some of the wealthiest and most sophisticated investors have become long-term backers after striking out on their own. Mexican billionaire Ricardo Salinas Pliego revealed in November that he’s put a chunk of his liquid funds in the world’s biggest cryptocurrency and first invested in it five years ago through Grayscale Investments, when the price of one Bitcoin was about $800.
Now, Bitcoin’s rally over the past few months is intriguing wealthy investors in a new way.
“We have seen a surge in demand for investment professionals—particularly those focused on private equity and digital assets,” said Tayyab Mohamed, co-founder of Agreus Group, a London-based recruitment and resourcing company for family offices. In the past year, one single-family office based in the English capital completely shifted its investment portfolio of about $2.8 billion away from real estate to new asset classes including cryptocurrencies, he said.
Billionaire Traders
The boom has also vaulted those helping trade the digital assets into the world’s ultra-rich. Coinbase Global Inc. co-founder Brian Armstrong is now a billionaire, though estimates of his fortune vary, underscoring the wild price swings of cryptocurrencies. Set up in 2012, Coinbase is the biggest U.S. exchange for the assets and is expected to go public this month, marking another milestone for the transformation of crypto as a mainstream asset class.
“Trading and speculation were the first major use cases to take off in cryptocurrency, just like people rushed to buy domain names in the early days of the internet,” Armstrong, 38, wrote in a letter included in Coinbase’s registration filings with the U.S. Securities and Exchange Commission. “But we’re now seeing cryptocurrency evolve into something much more important.”
Yet for crypto newcomers like Dart, investing hasn’t been easy. Although he’s attended many next-gen courses that teach financial markets and trading via the family’s private banks, not much was explained about dealing with digital assets, he said.
Dart, who was drawn to crypto after his sister successfully invested in Bitcoin in 2014, has now set aside a small percentage of his family’s portfolio for it. He’s hoping that private banks will catch on to the craze and allow clients to include crypto in their accounts, instead of having to use external exchanges.
“It would be safer and much less of a hassle, while allowing us to achieve a more holistic view of our total asset allocation within our portfolios,” he said.
—With assistance from Emily Cadman.
This article was provided by Bloomberg News.