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Single-Family Offices Are Diversifying Investments With Bitcoin



According to a Family Office Association executive, family-owned investment groups are hedging their bets with the digital asset bitcoin.    

Also read: Antonopoulos Details Bitcoin’s Protection Against Quantum Computing


A Growing Number of Single-Family Offices Invest in Bitcoin

Single-Family Offices Are Diversifying Investments With Bitcoin Mainstream investors are looking towards bitcoin more and more these days as a safe haven and a digital asset hedge. With an ETF decision approaching, many bitcoin proponents hope it will be approved, adding an influx of mainstream investors to the cryptocurrency economy. An interview with the founder of the Family Office Association Angelo Robles reveals that there has been a rise in single family office (SFO) investments in bitcoin.

Family offices come in two categories: single-family office (SFO) or multi-family office (MFO). These types of investment groups are family-controlled, and SFOs are the predominant form of these businesses. Robles has noticed an increasing amount of SFOs that view the digital currency as a prospective asset class.

“There are a number of overlapping rationales for these single-family offices to invest in bitcoins”, explains Robles. For example, there’s a fixed supply of bitcoins, more businesses are accepting the currency, and more and more investors from hedge funds to institutional players are looking at bitcoins as a way to diversify a portfolio. Also, bitcoin benefits by being first on the scene and establishing a beachhead of sorts.”

Single-Family Offices Are Diversifying Investments With Bitcoin
If you created a multi-asset portfolio in July 2010 consisting of 49.5% equities, 49.5% bonds and 1% bitcoin you would have realized an average annualized return of 104%.

Bitcoin’s Outcome: Grand Slam or Crash

Alongside this, David Berger, of the Digital Currency Council, explains why he believes single-family offices see bitcoin as a diversification option. However, Berger doesn’t think bitcoin is a great way to preserve family office wealth, as he thinks there is too much volatility.

Bitcoin will have a binary outcome — it’ll either be a grand slam or it’ll crash — and there will be lots of volatility along the way. I don’t view Bitcoin as suitable for a family seeking wealth preservation, but see it more similarly to a high-risk high-reward venture investment and as a way to diversify a portfolio.  

The Family Office Association (FOA) has embraced the idea of SFOs utilizing bitcoin for wealth management by releasing reports about digital currencies in its portfolio section. One particular report is written by CNBC’s Brian Kelly called “Digital Currencies Transforming Finance.” FOA members can read the research report written by Kelly, which gives an “in-depth look at digital currencies transforming finance with a focus on Bitcoin and Bitcoin 2.0.”

Bitcoin as Prospective Asset Class

Even though the Digital Currency Council’s David Berger sees bitcoin as risky, he’s noticed the cryptocurrency environment growing very fast. There’s no doubt SFOs are looking to bitcoin as a prospective asset class, but there are two types of investments happening, says Berger.

“While a growing number of single-family offices are investing in bitcoins and other decentralized digital currencies, some are choosing to invest in companies that are building the technology and infrastructure,” Berger adds. “The ecosystem developing around this new asset class is growing very quickly.”

What do you think about family offices investing in bitcoin? Let us know in the comments below.


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