Inflation is at an all-time high around the world with countries like the US, Turkey, and Argentina staring down the barrel of a 6% to 50% rise in the cost of living.
Thinking you’re safe from the effects of inflation just because you’re rich? Think again! A study of 12 developed countries between 1920 to 2016 concluded that inflation hurts the rich more than the poor.
In the past, ultra-rich investors were known to turn to gold to offset inflation. But gold has lost its shine as it has generated negative returns over the past decade. The alternative? Many think it's Crypto.
Are The Ultra Rich Investing In Crypto?
Turns out, a significant chunk of ultra-rich investors are turning to top cryptocurrencies like Bitcoin and Ethereum. A recent survey by a popular wealth management firm suggests that:
- At least 68% of American millionaires own cryptocurrencies including the likes of Tim Cook
- Investing in crypto isn’t limited to HNIs in the West as ultra-rich families from Asia like the Ambanis, Mistrys, Hartonos, and others are also allocation their wealth to crypto
- 83% of millennial millionaires own crypto
- As much as 4% of the crypto market is owned by billionaires
Affluent investors like yourself are turning to cryptocurrencies for a variety of reasons, the most popular ones include:
- Beating inflation (comfortably)
- Earning significantly high returns
- Adding a new asset class to their portfolio
- Betting on the future of technology, metaverse, and more
There’s logic to this. The rich have a greater ability to bear risks and can allocate a significant portion of their portfolio to relatively new, high risk, and high reward cryptocurrencies.
That said, just because you’re rich does not mean you invest in cryptocurrencies without a plan. You must turn to important factors (discussed later) and look at what your peers are investing in.
What Cryptocurrencies Are The Ultra Rich Investing In?
Many ultra-rich individuals think the best cryptocurrencies to invest in are Ethereum and Bitcoin as per a survey by a famous wealth management firm. BTC and ETH are, in a sense, the crypto market.
They represent the two biggest cryptocurrencies of all time with a combined market cap of over a trillion dollars and have generated more than 1000% returns since 2019. Famous BTC and ETH investors include:
- Elon Musk
- Mark Cuban
- Jack Dorsey
- Chamath Palihapitiya
- Naval Ravikant
- Ashton Kutcher
Dogecoin, which isn’t in the top 10, is also favoured by the rich because of its famous backers. Billionaires like Elon Musk and Mark Cuban have revealed that they own DOGE in their portfolio.
Factors To Consider Before Investing In Cryptocurrencies
Now that you know what other ultra-rich individuals are investing in, it’s time to analyze the important factors you must look at before buying any cryptocurrency. These include (but are not limited to):
- Market cap
- Age of the cryptocurrency
Each factor indicates something important about the crypto you could invest in. Market cap, for example, will help you determine the true value and stability of a cryptocurrency.
That’s why the notion that BTC and ETH are the crypto market is widely popular. See for yourself the disparity between the market cap of BTC and ETH compared to others.
Furthermore, cryptocurrencies are inherently risky and volatile but even within them, you could draw a line using their market cap that splits them into:
- Low risk: BTC, ETH, and other top 10 cryptocurrencies
- Medium risk: Top 11-20 cryptocurrencies
- High risk: Any crypto beyond #20
You could go a level deeper to further classify cryptocurrencies using the age of the token. The older the token, the higher the chance that it can survive and thrive using the Lindy effect.
Finally, Given all of this, we can now jump onto your cryptocurrency investment options.
List Of Cryptocurrencies To Invest In For The Ultra-Rich
1. Category A: Comparatively Stable & Well Established
2. Category B: Newer But Reasonably Established
3. Category C: High Risk, High Reward Potential
Note: Facts & figures are true as of 09-02-2022. None of the information shared here is to be construed as investment advice. Exercise caution when investing in unregulated assets like cryptocurrency.