Crypto’s Last Week
This edition of “Crypto’s Last Week” accounts for the most notable, and crypto-related — institutional, investment, and regulatory — news published between Saturday, October 24, 2020, and Friday, October 30, 2020.
This past week, Grayscale Investment released its second annual Bitcoin Investor Study after what has turn out to be a very interesting month for BTC on an investment and institutional level. This latest report, similarly to the 2019 edition, surveyed 1,000 U.S. investors between the ages of 25 & 65 with household incomes above $50,000. The survey also highlighted that the Bitcoin investor, on average, is college-educated, male, employed, and on the younger side of the surveyed spectrum.
“Investors interested in Bitcoin are also more likely to be actively seeking new investment opportunities, describe their risk tolerance as “aggressive,” hold investment accounts with multiple firms, and avidly consume financial news.”
The first notable result found, was that in 2020, over half (55%) of these investors were interested in Bitcoin investment products, compared to 36% of investors interested in bitcoin products during 2019, resulting in a 52% increase of interest in a year.
For those investors who allocated capital in Bitcoin, 83% reported having made investments within the last 12 months, with 38% having invested in the last 4 months, of which nearly two-thirds had moved forward with their decision to invest in Bitcoin due to the current COVID-19 global crisis. Clearly indicating that there is an increase in the search for alternatives that will diversify portfolios and hedge against potential currency devaluations due to inflation.
Additionally, Bitcoin continues to rise in appeal and familiarity with investors, rising from 53% in 2019 to 62% in 2020, with close to half of the surveyed considering digital currencies will be regarded as “mainstream” at the end of the current decade. This could be related to the cohort with the greatest proportion of Bitcoin investors being between the ages of 25 and 34, which directly reflects the shift in considerations and analysis there will be with the future wealth relocation (estimated $68 trillion) from “boomers” to “GenX” and “Millenials”.
Finally, the report added valuable information from a recent Fidelity survey in the U.S. and Europe, where 36% of respondents acknowledged they were invested in digital assets and 60% considered digital assets had a place in their portfolios.
Private keys have been a common topic of discussion among crypto holders for years, with avid industry participants usually, if not always, recommending the storage of private keys in safe and preferably offline hardware wallets that can be connected directly to exchanges, therefore, having complete control of one’s digital assets and avoiding human error or technological safety failures.
“If you don’t own your private keys, you don’t own bitcoin”.
An example of why working with a custodial exchange that is subject to a single point of failure — i.e. there is a single executive within the company that has access to the exchange’s funds — such as the current unfortunate situation that OKEx users have experienced for weeks. Since this is an ongoing event, it is impossible to know the consequences of having users unable to withdraw their digital assets whenever they see fit or even at what period in time this may be possible.
This situation has become particularly worrying due to the importance and positioning OKEx has gained in the crypto markets, considered to be among the top 5 globally in 24-hour volume in spot and derivatives, with $3.1billion and $2.3 billion respectively.
The most renowned situation, similar to the aforementioned, is the death of CuadrigaCX CEO, Gerald Cotten in 2019, who having exclusive access to at least $169 million from over 76,000 investors, never established a security back-up to avoid such a situation.
The combination of these widely covered incidents will hopefully be a reason for customers, service providers, and regulators to maintain high standards when it comes to the custody of virtual assets that could represent millions of dollars or a majority of an individual’s savings or even investment portfolio.
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