deVere Investor Insight - Q1 2021

This all followed on from Paypal’s decision last year to allow customers to buy, sell and hold Bitcoin, and asWall Street giants such as Goldman Sachs and JPMorgan issue RFIs (request for information) to explore Bitcoin and crypto asset custody further. As such, there is a clear direction of travel, as institutional investors are taking Bitcoinmuchmore seriously as a financial asset and a mediumof exchange. Yet it’s not just institutional investors who are increasing their exposure to Bitcoin and other cryptocurrencies. A recent deVere survey revealed baby boomers and Generation X are piling into digital currencies as they acknowledge that digital, borderless money is the way forward. One of the drivers for older generations’ interest in crypto stems from the historic levels of quantitative easing by central banks in response to the coronavirus crisis. They understand that by flooding themarket with additional money, traditional fiat currencies are being devalued, which coupled with the inflation threat, are prompting them to search for alternatives. Another driver for the heightened interest in Bitcoin is its reputation as ‘digital gold’. Described by renowned crypto investors the Winklevoss twins as “better at being gold than gold”, Bitcoin is often likened to the precious metal as it is also a mediumof exchange, a unit of account, non-sovereign, decentralised, scarce, and a store of value. As CameronWinklevoss stated: “Historically, when there’s been a crisis, interest in Bitcoins and these types of assets increases naturally because of their fixed supply.” Indeed, the Covid crisis is a prime example. The pandemic is also accelerating the development of central bank digital currencies, or CBDCs. As millions of people around the world turn to cashless payments, central banks have been lookingmore into how CBDCs could become a reality. According to Benoit Coeure, head of the Innovation Hub at the Bank for International Settlements (BIS): “COVID-19 will be remembered by economic historians as the event which pushed CBDC development into top gear.” 28 Investor Insight // Q1 - 2021