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Goldman Sachs, a leading American investment bank, recently conducted a study and found that at least 45% of family offices are interested in pumping large sums of money into the crypto market. Per the bank’s findings, 15% of family offices have already invested some of their clients’ funds in digital assets. Family offices invest in lucrative traditional assets, such as private equity, real estate, and investment funds. However, the current state of the global financial system has forced them to consider other options.
While financial experts have been cautioning against the volatility of cryptocurrencies, the ultra-rich population does not seem to be heeding this advice. Per Goldman Sachs, the prevalence of special purpose acquisition companies (SPACs) has triggered an insatiable crypto appetite among investors. Reportedly, family offices believe cryptocurrencies can hedge against the increasing inflation, prolonged low rates, and other macro-economic factors that worsened following the onset of the COVID-19 pandemic.
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According to Meena Flynn, Partner and Global Co-Head of Private Wealth Management at Goldman Sachs, the richest people in the world are not investing in crypto just because of its hype. She claims that such investors believe cryptocurrencies have the potential to shape the future. Flynn further disclosed that the ultra-rich think the blockchain and digital assets will have a similar impact as the internet from an efficiency and productivity point of view.
Crypto demand continues rising
After the crypto market’s bullish performance this year, a lot of institutional investors entered the nascent sector. The most notable entries over the past year are from Tesla, which purchased $1.5 billion worth of BTC, and PayPal, which started supporting crypto services on its platform. Companies such as MicroStrategy and Ark Invest have also been bolstering their crypto holdings with more purchases.
With such companies dabbling in crypto, institutional investors followed suit, forcing financial institutions to offer crypto services. An example is JP Morgan Chase, Goldman Sachs’ rival, which had a negative stance on Bitcoin (BTC/USD) until its clients demanded it. According to JP Morgan’s Director of Asset and Wealth Management, Mary Callahan Erdoes, the bank’s clients now consider cryptocurrencies an asset class. She added that JP Morgan intends to continue offering crypto services to meet the increasing demand from its clients. Apart from offering crypto services, JP Morgan also launched its native cryptocurrency dubbed JPMCoin.