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Family Offices and Crypto: Just How Real Is It for Old Money?

CryptocurrencyOct 14, 2021 01:30AM ET
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Family Offices and Crypto: Just How Real Is It for Old Money?

  • Family offices are becoming more involved in crypto.
  • Most wealthy families start investing in crypto with 1% or 2%, but often that grows to make up a larger percentage of their portfolio.
  • Family investors rely on mentorship and learn from those who may know the market better and are more experienced.
  • Asymmetric investment opportunities are worth the volatility and the risk of crypto, experts say.

Everyday investors might think that family offices just serve the Baby Boomer generation who own a generous amount of “traditional” wealth and who would never be interested in the volatile and nascent cryptocurrency. However, the reality is quite different – family offices are becoming more involved in blockchain.

Angelo Robles is the host of the Angelo Robles podcast and CEO of a global organization Family Office Association, dedicated to wealthy families. The founder of the family office is a keen investor, active in over 30 different digital assets. He explained that billionaire families’ interest in crypto assets is increasing.

“Family office world tends to seem old and stagy, but cryptocurrency is gaining popularity and becoming widespread among the rich families,” said Robles.

Changes from 2017 to 2021

Family Office Association has done events with crypto assets since 2017. There was a lot of interest that year, but when the crypto winter hit and the market significantly went down, the interest faded away for a while. However, the super-rich mostly held firm. As Robles explained, they didn’t get afraid or nervous. If anything, they’re long-term investors that look at crypto as a buying opportunity. They didn’t look so smart for about two and a quarter years, but then COVID-19 came along and a month or two after that it seemed like Bitcoin and Ethereum prices began to explode.

“Some people in my community feel it was the white paper by hedge fund legend Paul Tudor Jones that sparked interest specifically in Bitcoin in the summer of 2020. Then it became some level of institutional adoption,” Robles told DailyCoin during an exclusive interview.

Robles clarified that a lot of the wealthy families who invest have been active not only in Bitcoin and Etherium, but also in Solana this year, and on platforms like EOS. So they are more fluid on cryptocurrencies than they’re given credit for, and what a lot of them are willing to talk about in public. What they say in public may be one thing, but what they do in reality, might be another.

“If I had to give you percentages for surveys that I do, I’d say that in 2017, 45% of very wealthy investors had some allocation to crypto assets. As of September 2021, the number is probably up to 55%. Admittedly, most have under 2% of their investable assets, although some have more.

But here’s the key point: when I ask families that are not currently allocated to cryptocurrency whether they are interested and getting close to possibly pulling the trigger, about 80% said yes. They are doing more diligence and they’re trending towards some sort of allocation, and maybe it’s 25 basis points to Bitcoin, but it gets their feet wet, makes them feel engaged. So the trend is going nothing but up,” Robles explained.

How Do the Rich Invest?

“As new information comes in, I often need to adapt my decision-making very quickly,” Robles shared.

“That does not mean I'm a highly tactical trader, I pretty much buy and hold. But sometimes I do take assets from other resources and I want to make sure my thesis is strong and that I'm doing it at a level of logic. Also, sometimes I reallocate from my positions inside of crypto. And my experience is – the families who invest and are much much bigger than me – are extremely similar.” Rich families get information but they make their own decisions and they tactfully manage the risk in their crypto assets because they do want to be careful. They do understand we might have a crypto winter and the market may go down a lot. We all understand that. But until it actually happens, when the rubber hits the road, then we see who is a long-term investor.

On The Flipside

  • Family office interest in cryptocurrency is likely to increase in the future.
  • Now could be an exciting time to invest in digital assets because of the asymmetric opportunities.

Why You Should Care?

Billionaires are interested in more than just Bitcoin and Etherium. They’ve researched other crypto assets, institutional custody, NFTs, and decentralized finance – the bigger picture of what crypto assets could be and the influence they’ll have on changing the world, the economy, and the investing landscape.

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Family Offices and Crypto: Just How Real Is It for Old Money?
 

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