INVESTMENT BEHAVIOURS
A study produced by FT Longitude for
Overview Landscape Sentiments People Outlook
WHAT KIND OF INVESTOR ARE YOU?
Understanding investment behaviours in digital assets
"When you see people doing well, it draws you in. But you've also got to understand that it's a longer-term investment – and those people got involved at an earlier stage of the adoption curve of cryptocurrency."
INVESTMENT BEHAVIOURS
THE PRIVATE WEALTH IN DIGITAL ASSETS STUDY 2022
People
WHAT KIND OF INVESTOR ARE YOU?
Understanding investment behaviours in digital assets
"When you see people doing well, it draws you in. But you've also got to understand that it's a longer-term investment – and those people got involved at an earlier stage of the adoption curve of cryptocurrency."
Explore investor archetypes
Our study found three distinct types of investor:
Sophisticated investors
They have a strong interest in digital assets and their investments reflect this. They are also comfortable with risk: this group was undeterred by the market volatility over the summer, with interest remaining the same post-crash. With an average age of 39, they tend to have a millennial mindset, and – in our research – are mainly located in Asia. They account for 31% of our survey respondents.
Experimental investors
They are moderately interested in digital assets and have entered the market with up to 25% of their portfolios invested. This group saw a slight dip in interest levels in the wake of this year’s market crash, suggesting a cautious risk appetite. They have an average age of 52, which means this group is likely to be approaching retirement. They account for 7% of our survey respondents.
Sceptical investors
They are most likely to be older men (average age 72) and are predominantly located outside of Asia in this study. They have no interest in digital assets and as a result have not made investments in any type of digital assets. They account for 25% of our survey respondents.
Characteristics
Digital assets invested in Bitcoin 71% / NFTs 52% / Stablecoins 47% / Ether 42% / Altcoin 40%
Characteristics
Digital assets invested in Bitcoin 62% / NFTs 39% / Ether 17% / Stablecoins 11% / Altcoin 8%
Characteristics
Digital assets invested in No investment
MAI = Mass affluent individuals HNWI = High net worth individuals
Explore investor archetypes
Our study found three distinct types of investor:
Sophisticated investors
They have a strong interest in digital assets and their investments reflect this. They are also comfortable with risk: this group was undeterred by the market volatility over the summer, with interest remaining the same post-crash. With an average age of 39, they tend to have a millennial mindset, and – in our research – are mainly located in Asia. They account for 31% of our survey respondents.
Characteristics
Digital assets invested in Bitcoin 71% / NFTs 52% / Stablecoins 47% / Ether 42% / Altcoin 40%
Experimental investors
They are moderately interested in digital assets and have entered the market with up to 25% of their portfolios invested. This group saw a slight dip in interest levels in the wake of this year’s market crash, suggesting a cautious risk appetite. They have an average age of 52, which means this group is likely to be approaching retirement. They account for 7% of our survey respondents.
Characteristics
Digital assets invested in Bitcoin 62% / NFTs 39% / Ether 17% / Stablecoins 11% / Altcoin 8%
Sceptical investors
They are most likely to be older men (average age 72) and are predominantly located outside of Asia in this study. They have no interest in digital assets and as a result have not made investments in any type of digital assets. They account for 25% of our survey respondents.
Characteristics
Digital assets invested in No investment
MAI = Mass affluent individuals HNWI = High net worth individuals
Investment horizon
Investors expect to hold digital assets for a relatively short amount of time
Investment strategies are maturing and not everyone is short-termist: Bitcoin investors were equally divided across three investment time horizons - those who saw themselves holding the asset for less than one year, 1-3 years, and 4 years and beyond.
76% of our sophisticated investors and 64% of our experimental investors say they are taking a longer term view with their digital assets investment strategy as they become more familiar with the asset class.
Sophisticated investors in particular, are seeking a broader range of investment products that suit different risk profiles (e.g. stablecoins and fixed income solutions, yield-generating/enhancing structured products, diversified funds, etc.) – this is the number one factor that would increase their confidence in digital assets.
Investment horizon
Investors expect to hold digital assets for a relatively short amount of time
Investment strategies are maturing and not everyone is short-termist: Bitcoin investors were equally divided across three investment time horizons - those who saw themselves holding the asset for less than one year, 1-3 years, and 4 years and beyond.
76% of our sophisticated investors and 64% of our experimental investors say they are taking a longer term view with their digital assets investment strategy as they become more familiar with the asset class.
Sophisticated investors in particular, are seeking a broader range of investment products that suit different risk profiles (e.g. stablecoins and fixed income solutions, yield-generating/enhancing structured products, diversified funds, etc.) – this is the number one factor that would increase their confidence in digital assets.
More than hype: It’s NFT time for sophisticated investors
The non-fungible token (NFT) boom has attracted widespread attention in the past year. And our sophisticated (63%) and experimental (55%) investors are interested in increasing their NFT holdings in the next three years. Our sceptical investors are hesitant.
Despite the current instability in the NFT market, companies including Meta, Microsoft and Apple are betting on the technology as an indispensable component of the future of the Internet. Mainstream brands including Adidas, Dolce & Gabbana and Coca-Cola, meanwhile, have launched their own NFTs.
Right now, NFT is limited to a nice picture on the internet. But NFT as a technology can provide more potential – with different marketplaces and different prices – so we will see more trading activity for NFTs.
CEO, Wirex
More than hype: It’s NFT time for sophisticated investors
The non-fungible token (NFT) boom has attracted widespread attention in the past year. And our sophisticated (63%) and experimental (55%) investors are interested in increasing their NFT holdings in the next three years. Our sceptical investors are hesitant.
Despite the current instability in the NFT market, companies including Meta, Microsoft and Apple are betting on the technology as an indispensable component of the future of the Internet. Mainstream brands including Adidas, Dolce & Gabbana and Coca-Cola, meanwhile, have launched their own NFTs.
Right now, NFT is limited to a nice picture on the internet. But NFT as a technology can provide more potential – with different marketplaces and different prices – so we will see more trading activity for NFTs.
CEO, Wirex
Tech stocks on steroids
This is partly a response to global events, says one director at a European digital asset investment firm. “We saw a rise in institutional adoption on the back of the unprecedented quantitative easing and fiscal stimulus packages that were happening because of Covid-19,” he says. “Investors started looking around at the assets that might protect them from that inflation risk.”
Investors’ speculative attitude toward digital assets is reflected in their expectations. A significant proportion of investors expect to hold assets (based on today’s outlook) for less than one year, instead of holding them as a store of value like they might hold traditional strategic asset classes such as gold.
I still have a significant amount in the boring, traditional stocks, which are much more steady. Then, in the past few years I got more involved in a few tech stocks. But crypto interests me because it's a bit like tech stocks on steroids.
Experimental investor
Tech stocks on steroids
This is partly a response to global events, says one director at a European digital asset investment firm. “We saw a rise in institutional adoption on the back of the unprecedented quantitative easing and fiscal stimulus packages that were happening because of Covid-19,” he says. “Investors started looking around at the assets that might protect them from that inflation risk.”
Investors’ speculative attitude toward digital assets is reflected in their expectations. A significant proportion of investors expect to hold assets (based on today’s outlook) for less than one year, instead of holding them as a store of value like they might hold traditional strategic asset classes such as gold.
I still have a significant amount in the boring, traditional stocks, which are much more steady. Then, in the past few years I got more involved in a few tech stocks. But crypto interests me because it's a bit like tech stocks on steroids.
Experimental investor
Uncertain investors are easily scared off
So, individual investors see an opportunity, but many feel unsure about the way forward – even before the recent downturn. But with Bitcoin now trading well below its November 2021 all-time high, the barriers to entry for crypto are lower.
Does that mean more investors will buy into digital assets?
Our research finds that, despite crypto’s steady move into the mainstream, less-experienced investors are still unsure about the potential risks and rewards. And negative headlines about cybersecurity risks and fraud can easily spook novice investors.
There's definitely an appetite for more understanding. I think, in the early days, it was like any momentum as it starts: if it's going up, people don't tend to ask too many questions. But when you get more volatility, you get more maturity across an asset class.
Chief Investment Officer, AMEE
Uncertain investors are easily scared off
So, individual investors see an opportunity, but many feel unsure about the way forward – even before the recent downturn. But with Bitcoin now trading well below its November 2021 all-time high, the barriers to entry for crypto are lower.
Does that mean more investors will buy into digital assets?
Our research finds that, despite crypto’s steady move into the mainstream, less-experienced investors are still unsure about the potential risks and rewards. And negative headlines about cybersecurity risks and fraud can easily spook novice investors.
There's definitely an appetite for more understanding. I think, in the early days, it was like any momentum as it starts: if it's going up, people don't tend to ask too many questions. But when you get more volatility, you get more maturity across an asset class.
Chief Investment Officer, AMEE
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
Outlook:
Why more education will unlock the digital future
Article:
An upstart segment of entrepreneurial investors are leading the way
Article:
Why investment from established finance players is driving confidence
Article:
Web 3.0 is bringing exciting investment opportunities
ALL RIGHTS RESERVED © 2022 Matrixport
Our study:
Landscape:
Sentiments:
Outlook:
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
Why more education will unlock the digital future
An upstart segment of entrepreneurial investors are leading the way
Why investment from established finance players is driving confidence
Web 3.0 is bringing exciting investment opportunities
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