FUTURE OUTLOOK
A study produced by FT Longitude for
Overview Landscape Sentiments People Outlook
WHY THE WORLD NEEDS TO LEARN ABOUT DIGITAL ASSETS
More education will unlock the digital future
"I'm not keen because I don't have knowledge of the industry. That's one of the barriers stopping me from investing, and I don't really have the time to research."
FUTURE OUTLOOK
THE PRIVATE WEALTH IN DIGITAL ASSETS STUDY 2022
Outlook
WHY THE WORLD NEEDS TO LEARN ABOUT DIGITAL ASSETS
More education will unlock the digital future
"I'm not keen because I don't have knowledge of the industry. That's one of the barriers stopping me from investing, and I don't really have the time to research."
Can a downturn be a sign of progress?
2022 has shown that digital assets are vulnerable to pressures affecting the wider economy. Assets such as Bitcoin and Ethereum showed much greater correlation with major stock indices, and the IMF warned that crypto was susceptible to the spillover effects. We entered a so-called crypto winter, which is when prices drop a long way and then stay low for weeks or months.
Crypto winters are nothing new – there have been five since 2017 and three since 2021. This time, it’s different: it’s entwined with the movements of the wider economy, which shows how digital assets’ maturity is growing and their foothold in the world of traditional finance is getting stronger.
The entry of corporates and financial institutions into the market is one reason analysts believe it will bounce back quicker this time. The digital assets ecosystem is now more established and technologically mature.
Investors have been stung by the implosion of stablecoin Terra and the plummeting value of crypto assets. Bear markets like these always trigger a period of consolidation, where weaker players fall away, but the better ones emerge stronger. The technology underlying digital assets is not in doubt – just as the bursting of the dotcom bubble in 2000 wasn’t a sign that the internet was unviable.
Our research shows that the most recent crash has done little to dampen the appetite of certain investors. Mass affluent individuals (MAI) are twice as likely to say they were moderately to highly interested in digital assets after the downturn on 12 May 2022, compared with those who were asked prior to this date. Despite the negative headlines, this group may see an opportunity to secure assets at a lower price point. Potential uses of digital assets are increasing as we move into an era of Central Bank Digital Currencies, blockchain-based brokerages, and the experimental worlds of Web 3.0 and the metaverse. One hundred years on from the Gold Standard, what direction will finance take?
Sometimes you're seeing great gains and then you're thinking, should I sell because I can make more, or should I just hold and wait out? It's very volatile. And I think that's the point: it's a real emotional journey.
High net worth individual (HNWI)
Experimental investor
Can a downturn be a sign of progress?
2022 has shown that digital assets are vulnerable to pressures affecting the wider economy. Assets such as Bitcoin and Ethereum showed much greater correlation with major stock indices, and the IMF warned that crypto was susceptible to the spillover effects. We entered a so-called crypto winter, which is when prices drop a long way and then stay low for weeks or months.
Crypto winters are nothing new – there have been five since 2017 and three since 2021. This time, it’s different: it’s entwined with the movements of the wider economy, which shows how digital assets’ maturity is growing and their foothold in the world of traditional finance is getting stronger.
The entry of corporates and financial institutions into the market is one reason analysts believe it will bounce back quicker this time. The digital assets ecosystem is now more established and technologically mature.
Investors have been stung by the implosion of stablecoin Terra and the plummeting value of crypto assets. Bear markets like these always trigger a period of consolidation, where weaker players fall away, but the better ones emerge stronger. The technology underlying digital assets is not in doubt – just as the bursting of the dotcom bubble in 2000 wasn’t a sign that the internet was unviable.
Our research shows that the most recent crash has done little to dampen the appetite of certain investors. Mass affluent individuals (MAI) are twice as likely to say they were moderately to highly interested in digital assets after the downturn on 12 May 2022, compared with those who were asked prior to this date. Despite the negative headlines, this group may see an opportunity to secure assets at a lower price point. Potential uses of digital assets are increasing as we move into an era of Central Bank Digital Currencies, blockchain-based brokerages, and the experimental worlds of Web 3.0 and the metaverse. One hundred years on from the Gold Standard, what direction will finance take?
Sometimes you're seeing great gains and then you're thinking, should I sell because I can make more, or should I just hold and wait out? It's very volatile. And I think that's the point: it's a real emotional journey.
High net worth individual (HNWI)
Experimental investor
The future of digital assets looks bright
We are at a tipping point
While the global cryptocurrency market cap has slipped to $1 trillion from its peak of $3 trillion in November 2021, interest in digital assets remains. Institutional players in traditional finance have continued to take an interest in digital assets, with more banks integrating cryptocurrency trading into their platforms and traditional fund managers successfully raising cryptocurrency funds.
In our research, nearly half of respondents (42 per cent) expect that most assets in the future will be digital. Many say that greater regulation will be an enabler for critical mass since this lack of clarity breeds risk and uncertainty. Regulation is vital to ensure that the digital assets class keeps growing. It could help to trigger a virtuous circle whereby more institutional investment leads to greater stability in markets, which attracts more retail investors and helps to improve the long-term stability and value of the market.
Days of quick rewards are fading
While the shocks of the most recent market crash have undermined investment strategies that are purely hype-based, they also encourage more longer-term investment strategies as the digital assets industry matures. Incoming regulation and growing technological maturity will help to stabilise the market and we will start to see less volatility.
I think that volatility is something we are going to look back on as transient, rather than something that is underlying the crypto market structure.
Co-Founder of Standard Crypto
The next wave of digital assets adoption is coming our way
Investors see digital assets as the future and their beliefs will shape the future. This is especially pronounced for younger investors - among the 18–25 year olds in our research, 53 per cent expect a majority of their portfolio to be invested in digital assets within the next three years — far higher than in any other age group.
Amid the regulatory landscape taking shape and an increasing amount of institutional players from traditional finance, crypto’s viability and longevity will be positively reinforced. With digital assets gaining momentum and validation, investors are moving to longer-term investment strategies. A future where the world embraces digital assets is on the horizon.
The future of digital assets looks bright
We are at a tipping point
While the global cryptocurrency market cap has slipped to $1 trillion from its peak of $3 trillion in November 2021, interest in digital assets remains. Institutional players in traditional finance have continued to take an interest in digital assets, with more banks integrating cryptocurrency trading into their platforms and traditional fund managers successfully raising cryptocurrency funds.
In our research, nearly half of respondents (42 per cent) expect that most assets in the future will be digital. Many say that greater regulation will be an enabler for critical mass since this lack of clarity breeds risk and uncertainty. Regulation is vital to ensure that the digital assets class keeps growing. It could help to trigger a virtuous circle whereby more institutional investment leads to greater stability in markets, which attracts more retail investors and helps to improve the long-term stability and value of the market.
Days of quick rewards are fading
While the shocks of the most recent market crash have undermined investment strategies that are purely hype-based, they also encourage more longer-term investment strategies as the digital assets industry matures. Incoming regulation and growing technological maturity will help to stabilise the market and we will start to see less volatility.
I think that volatility is something we are going to look back on as transient, rather than something that is underlying the crypto market structure.
Co-Founder of Standard Crypto
The next wave of digital assets adoption is coming our way
Investors see digital assets as the future and their beliefs will shape the future. This is especially pronounced for younger investors - among the 18–25 year olds in our research, 53 per cent expect a majority of their portfolio to be invested in digital assets within the next three years — far higher than in any other age group.
Amid the regulatory landscape taking shape and an increasing amount of institutional players from traditional finance, crypto’s viability and longevity will be positively reinforced. With digital assets gaining momentum and validation, investors are moving to longer-term investment strategies. A future where the world embraces digital assets is on the horizon.
Education critical for adoption
Nearly half of our sceptical investors (46%) say that a lack of understanding of digital assets is a major barrier to investment. And, worryingly, 34% of our investors overall admit to investing in digital assets even though they do not fully understand what they are doing.
So there’s an education gap here. But who should fill it?
of investors say that regulators need to do more to educate retail investors about the risks and rewards of digital assets, despite this not being within the normal duties of the regulator
Some government bodies have launched campaigns, but these are more likely to focus on the negatives of crypto investing rather than offering balance or nuance. The US Treasury, for instance, has launched a campaign designed to educate the public only about the risks of crypto investing.
In many cases, the regulators themselves are struggling to understand the industry, so they aren’t equipped to educate the public.
Industry has a role to play
The crypto market is known for its booms and busts, but the latest cycle has shown to be different. More people than ever have piled in, leading to the space being increasingly democratised and crypto is moving closer to becoming a mainstream asset class.
Promoting awareness of how digital assets function is an important way for companies to secure the longevity of the crypto industry.
Companies within the digital assets ecosystem, such as Matrixport, are stepping in to fill this gap and educate the next generation of crypto natives.
Claims of high returns generate excitement. But what we want to do is help investors to understand how some of those claims are too good to be true, but others are sustainable.
Head of Private Wealth, Matrixport
Education critical for adoption
Nearly half of our sceptical investors (46%) say that a lack of understanding of digital assets is a major barrier to investment. And, worryingly, 34% of our investors overall admit to investing in digital assets even though they do not fully understand what they are doing.
So there’s an education gap here. But who should fill it?
of investors say that regulators need to do more to educate retail investors about the risks and rewards of digital assets, despite this not being within the normal duties of the regulator
Some government bodies have launched campaigns, but these are more likely to focus on the negatives of crypto investing rather than offering balance or nuance. The US Treasury, for instance, has launched a campaign designed to educate the public only about the risks of crypto investing.
In many cases, the regulators themselves are struggling to understand the industry, so they aren’t equipped to educate the public.
Industry has a role to play
The crypto market is known for its booms and busts, but the latest cycle has shown to be different. More people than ever have piled in, leading to the space being increasingly democratised and crypto is moving closer to becoming a mainstream asset class.
Promoting awareness of how digital assets function is an important way for companies to secure the longevity of the crypto industry.
Companies within the digital assets ecosystem, such as Matrixport, are stepping in to fill this gap and educate the next generation of crypto natives.
Claims of high returns generate excitement. But what we want to do is help investors to understand how some of those claims are too good to be true, but others are sustainable.
Head of Private Wealth, Matrixport
Our study:
Why the world needs to learn about digital assets
Landscape:
Understanding the evolving landscape of digital assets
Sentiments:
How digital assets as an asset class is moving into the mainstream
People:
What kind of investor are you?
Article:
An upstart segment of entrepreneurial investors are leading the way
Article:
Governing rules are an essential step on the journey to financial legitimacy
Article:
Web 3.0 is bringing exciting investment opportunities
ALL RIGHTS RESERVED © 2022 Matrixport Privacy Policy | Terms & Conditions
Our study:
Landscape:
Sentiments:
Why the world needs to learn about digital assets
Understanding the evolving landscape of digital assets
How digital assets as an asset class is moving into the mainstream
What kind of investor are you?
An upstart segment of entrepreneurial investors are leading the way
Governing rules are an essential step on the journey to financial legitimacy
Web 3.0 is bringing exciting investment opportunities
ALL RIGHTS RESERVED © 2022 Matrixport | Privacy Policy | Terms & Conditions