Family Offices Likely to Invest in Bitcoin; Don’t Count on Banks – Coinbase Analyst

Adoption Bitcoin Investing
Last updated:
Journalist
Journalist
Sead Fadilpašić
About Author

Sead specializes in writing factual and informative articles to help the public navigate the ever-changing world of crypto. He has extensive experience in the blockchain industry, where he has served...

Last updated:
Why Trust Cryptonews
Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas - from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews
Ad DisclosureWe believe in full transparency with our readers. Some of our content includes affiliate links, and we may earn a commission through these partnerships. Read more

Institutional investors are far from homogenous and while some have already invested in cryptoassets others may never do this, Nick Prince, Financial Strategy Analyst at major crypto exchange Coinbase, said. Family offices are the most likely to invest in crypto, and banks/insurance companies the least, he added.

Source: Adobe/stockphoto-graf

In his recent blog post, Prince listed types of institutional investors in order of likelihood to invest in crypto, from most to least likely. The analyst said that the post was written while he still worked at the Santa Barbara County Pension Fund in the US last fall and doesn’t “incorporate any new information since I joined Coinbase.”

Types of institutional investors in order of likelihood to invest

1. Family offices

Family offices are responsible for managing the wealth of individuals or families and, among the investment teams mentioned here, these get the least amount of public oversight. These investors are awarded an accredited or qualified classification due to their wealth, and this enables them to invest in private markets that regulators don’t allow retail to enter. “With both the willingness and ability to invest in crypto,” wrote Prince, “this group is a logical early entrant into crypto investing.”
Learn more:
Major Investment Force Awakens As Financial Advisors Warm Up To Bitcoin
Launching Bitcoin ETFs Could Burst the Bitcoin Floodgates – Study

2. Endowments and foundations

Endowments and foundations manage funds for organizations like universities and charities, and as such, they differ from banks or insurance companies in several vital points. Their investment programs are allowed more risk, portfolio managers have more freedom in what they can invest in, and funds can afford enough time to wait out the market fluctuations, while holding onto an investment longer, thus earning an illiquidity premium. These characteristics enabled investors to move into alternative assets “(realizing incredible returns over time)” and “have also enabled them to be early movers into digital assets, as evidenced by Yale, Harvard and other notable endowments all making allocations to crypto funds.”

3. Pension funds

This “mythical unicorn of institutional investors” and “the proverbial pot at the end of the rainbow for HODLers” is a very diverse group. It may be a private corporation or a public entity of various sizes. “It is reasonable to expect pension funds to invest meaningfully into this asset class” before banks, insurance companies, and sovereign wealth funds, says Prince, but after family offices and endowments. Also, Prince argues that today exist compliant ways for a pension fund to invest in crypto. Furthermore, to the Cryptoverse these investors seem to be barely moving if at all, he says, but time and speed are relative. While the Cryptoverse is used to fast pace, to pension funds, theirs is likely just the normal speed of progress. “Appreciate this reality and continue to build, disrupt, and educate. Pensions will come, as they always do,” said Prince.
Learn more: New Crypto Pensions Deal Shows Institutionals ‘Are Already Here’

4. Sovereign wealth funds

This is a reserve pool that a government sets aside for investment, explained Prince, mostly present in countries rich in natural resources. He wrote that there is over USD 7 trillion, on the aggregate, of permanent capital “looking for a home,” and expects that crypto will eventually become a home to this money. But at this point in time, the “market is still too small for these behemoths to meaningfully deploy capital.”
Meanwhile, in April, Saudi Arabia’s sovereign wealth fund said they’re “looking into any opportunity.” However, a report by Bloomberg did not mention cryptoassets. The fund did not respond to our request for comment.

5. Banks/insurance companies

“Don’t hold your breath on banks/insurance companies putting bitcoin in their portfolios.” wrote Prince. They use the liability driven investing (LDI) strategy – they have liabilities on their balance sheets (e.g. customer deposits or insurance policies), which are legal obligations, and their goal is to keep the value of the assets paired with liabilities. “Since the value of bank deposits and insurance claims are not likely to move in lockstep with that of Bitcoin, not only would these institutions not be interested in investing, they actually have strict investment policy constraints that forbid investment in something like bitcoin,” concluded Prince.
__

Meanwhile, as previously reported, experts seem to agree with the idea that Bitcoin should spend less time proving itself. Crypto will tip and go mainstream once we build a product that people both want and can use, Lou Kerner, Partner at crypto advisory firm CryptoOracle, told Cryptonews.com right after “Black Thursday” when large professional and institutional traders accounted for the lion’s share of sellers. He added that this financial revolution is being led by people and organizations that do not ask permission. It’s not being led by institutions. “Institutions will follow. Build great products. Everything will follow,” he said.

__

Learn more
Japanese Analyst Says Traditional Investors Will Come Flocking to Crypto
Crypto 2020: Institutions to Pick Bitcoin, Retail to Stay in Altcoins

More Articles

Altcoin News
Andreessen Horowitz Scales Back UK Operations Amid Trump’s Pro-Crypto Policy Push
Ruholamin Haqshanas
Ruholamin Haqshanas
2025-01-25 11:28:20
Bitcoin News
Nasdaq Seeks In-Kind Creation and Redemption for BlackRock Spot Bitcoin ETF
Ruholamin Haqshanas
Ruholamin Haqshanas
2025-01-25 11:20:43
Crypto News in numbers
editors
Authors List + 66 More
2M+
Active Monthly Users Around the World
250+
Guides and Reviews Articles
8
Years on the Market
70
International Team Authors