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Cryptocurrencies have emerged as a pivotal conversation in the 21st century, and it comes as no surprise given their transformative potential and widespread implications.
For many, they seem like a beacon of hope, offering a sanctuary for investments when traditional financial assets stumble.
It’s only logical that the ultra-wealthy have eagerly embraced the crypto wave they have the most at stake.
Merrill Lynch and Wells Fargo, two of the largest American banks, are now beginning to offer Bitcoin ETFs to their rich clients.
But here’s the twist millionaires’ expertise in crypto may not be as extensive as you’d think.
It’s rather intriguing to arrive at this conclusion. There’s a common assumption that crypto whales wouldn’t act without a comprehensive grasp of the market dynamics, given the substantial stakes involved.
After all, they’re vested with considerable wealth and wouldn’t risk losing it in the blink of an eye. However, at our core, we’re all humans, driven by a mix of fear and greed.
No matter how much wealth we possess or how experienced we become, we’re still susceptible to making critical and sometimes irreversible mistakes.
And cryptocurrency investments, due to their straightforward yet high-risk nature, have emerged as one of the simplest paths to losing money without any opportunity for recovery.
It’s not merely a conjecture but a verifiable fact supported by numerous surveys conducted by reputable analytical firms.
Ultra-wealthy crypto investors indeed lack essential knowledge about crucial security protocols necessary to safeguard their assets and the measures authorities employ to prevent money laundering.
They also contribute significantly to the millions of dollars locked in unclaimed crypto assets, which can never be accessed.
Millionaires aren’t worried but they should be
Let’s begin by noting that there are currently over 88,000 crypto millionaires worldwide, along with more than 180 centi-millionaires and approximately 22 billionaires, as reported by Henley & Partners in June 2023.
As expected, the majority of wealth is concentrated in Bitcoin, with over 40,000 millionaires, nearly half of centi-millionaires and more than a quarter of billionaires primarily holding their capital in BTC.
Now, let’s just merge these figures with insights from another report, conducted by Owner.One.
It highlights that just a mere seven percent of ultra-rich capital founders and families with holdings of up to $100 million in crypto conduct due diligence before delving into transactions, thus jeopardizing their ownership history advantage.
Equally alarming, only 12.8% of the survey’s respondents comprehend the irreversible consequences of forfeiting ownership of crypto assets, while a substantial 87.2% appear indifferent to the risks associated with holding such assets.
Furthermore, a staggering 42.8% of capital founders and an astonishing 88% of their progeny and relatives lack familiarity with KYC (know your customer).
Even more striking is the fact that only four percent of respondents possess a comprehensive understanding of the multifaceted challenges arising from KYC procedures.
Consequently, it comes as no surprise that millions of dollars in cryptocurrencies remain unclaimed. Arkham intelligence alone has identified dozens of accounts with six to seven figures in bridge contracts that have been forgotten about.
And this number is likely to continue growing, with new crypto users constantly entering the industry and approximately 1,500 new crypto millionaires emerging each day, according to the analytical firm Kaiko Research.
Hence, while new crypto wealth is continuously generated, there’s a notable lack of awareness among new ultra-rich investors regarding crypto operations and asset futures.
“There’s no problem money can’t resolve”
Ultra-rich people may overlook or underestimate the risks inherent in cryptocurrencies due to a lack of urgency.
With substantial wealth, they may perceive potential losses from crypto investments as inconsequential in the grand scheme.
Also, ultra-rich individuals may possess unwavering faith in their ability to navigate financial markets adeptly.
The reason is simple hey certainly faced challenges on their journey to success. As a result, they have confidence in themselves and choose not to dwell on worst-case scenarios.
Finally, they simply don’t want anyone to know the extent of their assets or how to easily access them. This is understandable, as it could jeopardize their security.
However, the issue arises when they fail to take responsibility for storing their assets safely and keep information about them in a risky manner. Ultimately, they’re putting themselves at risk not others.
There’s a significant possibility they could one day lose access to their money or encounter difficulties with KYC when authorities inquire about the source of wealth.
So, the strategy of keeping quiet for safety isn’t as secure as it may initially seem.
Small step for an investor, big leap for the entire market
The influence of HNWIs (high-net-worth individuals) on the market is profound. For instance, just last week, a staggering $6 billion in BTC was transferred from one wallet.
An additional illustration is the recent occurrence of two new crypto whales purchasing $40 million worth of ETH, which was interpreted as a bullish trend indicator.
This highlights a crucial trend hen ultra-wealthy crypto investors take action, they create waves in the market and have the power to influence its direction. This scenario has unfolded repeatedly.
Therefore, those wielding substantial sway in the market should handle their assets with caution.
This is crucial not only for protecting their own crypto holdings but also for safeguarding those of fellow investors and shaping the future of cryptocurrencies.
A single misstep could destabilize entire portfolios and markets.
Alex Onufriychuk is a blockchain advisor, entrepreneur, and coach at QUBIC Labs Accelerator. He is also a former co-founder and CEO of Kaminari, a Lightning Network infrastructure.
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured Image: Shutterstock/Eduard Muzhevskyi
