Key takeaways
- While crypto investing has been traditionally driven by retail investors, institutional houses have been increasingly more active in the space recently.
- With the inception of the “metaverse,” the race is open to identify and gain exposure to “the next big thing” – the future best performing currencies.
- Yieldstreet offers access to a crypto fund, a manager with an established track record in investing in less well-known cryptocurrencies.
Growing enthusiasm for cryptocurrency investing has driven large flows into the asset class in the past few years. The total amount of net new investments in crypto funds approached the USD 10 billion-mark in 2021, though the start of 2022 saw increasing volatility spurred by potential regulatory action in both Europe and the US.
Crypto – and now NFT – investing has been traditionally retail-driven, the opposite of what normally happens with more established instruments such as bonds, stocks and real estate, where cutting-edge institutional investors are at the forefront and drive trends. Lately, however, institutional investors are warming up to the asset class due to a combination of pressure by wealthy private clients and fear of missing out. According to Coinbase data, of the USD 335 billion in trades hosted on the platform in Q1 2021, 225 billion were institutional-driven. An additional – feature of the asset class is its appeal to millennials, who are nine times more likely to invest in crypto than their parents – the baby boomers (27% to 3%). This is in stark contrast to the current wealth distribution in the United States, where, as of 2020, 53% of total US wealth was controlled by boomers, with millennials owning just 5%.
While Bitcoin remains by far the crypto asset with the largest market cap – in the USD 1 trillion territory – there is increasing interest in less well-known currencies, and a frantic search for the ones with the potential to attract the largest flows going forward. Indeed, if you are an attentive crypto investor, you’d have likely been reading about the metaverse – more precisely about competing metaverses-and you’re probably aware that there may be a potential correlation between the appeal of a new currency and its projected degree of utilization in the metaverse(s). This correlation is expected to drive cryptocurrency utilization – the more a currency is sought for metaverse transactions, the more likely it is to attract flows and eventually appreciate. At this moment, competing infrastructures are fighting to become the main metaverse of choice for users – the place where most customers will buy their NFTs, virtual real estate, or game tokens in exchange for cryptocurrency.
This process is not too dissimilar to what happened to sovereign currencies in the years of rapidly increasing global trade flows, with the British pound initially, and the US dollar later -becoming the dominant means of payment on the back of the economic might and wide network of commercial connections of their countries of issuance. On that note, blockchain technologies are seen by leading crypto investors as the underpinning of a new financial infrastructure, just as steamers and the telegraph were instrumental in accelerating globalization in the early 1900s.
This is why within the crypto space, while it is understandably hard to give up exposure to more established currencies such as ETH and BTC, it appears that many experienced investors are looking to invest in less-known currencies that are likely to become – in their view – widely used means of payment on popular metaverses. Just as with any other asset class, however, there is only a limited amount of knowledge a retail investor – and to a degree, even non-specialized institutional investors – can acquire about future trends.
Yieldstreet offers an opportunity to invest in a third-party fund that is highly specialized and has a track record of selecting high-octane investment opportunities in the crypto space.
Learn more about the ways Yieldstreet can help diversify and grow your portfolio.
1. Net inflows into crypto funds in ’21 hit $9.3 billion – Livemint
2. Millennials own less than 5% of all U.S. wealth – CNBC
What's Yieldstreet?
Yieldstreet provides access to alternative investments previously reserved only for institutions and the ultra-wealthy. Our mission is to help millions of people generate $3 billion of income outside the traditional public markets by 2025. We are committed to making financial products more inclusive by creating a modern investment portfolio.
2 Represents an average net realized internal rate of return (IRR) with respect to all matured investments in your portfolio, utilizing the effective dates and amounts to and from the investments and net of management fees and all other expenses charged to the investments. Past performance is not a reliable indicator of future results and should not be relied upon as the basis for making an investment decision. All securities involve risk and may result in significant losses, including the loss of principal invested.[read more]