The number of high-net-worth individuals which hold Bitcoin has increased significantly. According to the Crypto Wealth Report 2024 by Henley & Partners, there are now 85,400 individuals with Bitcoin holdings of over $1 million, a 111% increase compared to the previous year. So why is this?
Higher liquidity and greater flexibility
Tesla famously bought $1.5bn in Bitcoin in 2021, because they ‘were looking for a place to store cash that wasn't being immediately used, to get some level of return but also preserve liquidity’, according to CFO Zack Kirkhorn.
Bitcoin can be traded 24 hours a day, 7 days a week, 365 days a year, via various cryptocurrency exchanges. This round the clock availability allows for quick and easy transactions at any time, unlike traditional markets which have set trading hours and holidays. Its decentralised nature means Bitcoin can be traded globally without the need for intermediaries or currency conversions, making it more accessible to a wider audience and providing innovative financing solutions that are not bound by traditional banking processes and procedures. Users can conduct transactions directly with one another, reducing delays, lowering costs and providing quick access to funds. Bitcoin's high trading volume compared with more traditional assets contributes to its liquidity.
Lower interest rates
Crypto-backed savings and loans typically offer more competitive returns compared to traditional bank loans, making them an attractive investment option. Platforms like Nexo and YouHodler currently offer interest rates of up to 15% Annual Percentage Yield for Bitcoin deposits.
Privacy and security
Bitcoin transactions offer a higher level of privacy and security, which is appealing to high-net-worth individuals who value discretion in their financial dealings. Because Bitcoin operates on a decentralised network, there is a reduced risk of a single point of failure that could be exploited by hackers, and advanced cryptographic techniques make it extremely difficult to alter or counterfeit transactions. High-net-worth individuals can take personal control of their Bitcoin holdings using hardware wallets, which store private keys offline, providing strong protection against online threats.
Get in the Know
Subscribe to our newsletter
Global accessibility
As explored in part two of this article, Bitcoin can be used for cross-border transactions, making it easier for wealthy individuals to manage international finances and investments. Bitcoin offers unmatched global access, allowing for transactions without the need for payment processors. This means you can send and receive Bitcoin anywhere in the world within minutes, no matter the location, bypassing the high fees and long processing times that come with traditional international payments. This makes Bitcoin an ideal solution for those with international business interests, or for frequent travellers.
What does the future hold for Bitcoin?
Whilst prices can and do fluctuate, Bitcoin has shown a significant overall price appreciation over the years, offering the potential for substantial returns on investment. As the technology improves and acceptance of Bitcoin continues to increase, top economists are predicting that Bitcoin’s upward trajectory will persist. There’s also a growing acceptance of the currency at an institutional level, with the introduction of Bitcoin exchange-traded funds (ETFs), and clearer guidelines from regulatory bodies instilling more confidence in Bitcoin as an asset class.
Of course, no one can accurately predict the future value of Bitcoin. However, Wall Street investment firm Bernstein forecasts that a single Bitcoin could hit $200,000 by the end of 2025. Tim Draper, a well-known venture capitalist, also predicts that Bitcoin prices will continue to rise, reaching $120,000 by the end of 2024, and as much as $250,000 by 2025. His optimism is based on increasing adoption of Bitcoin, its superiority over traditional financing options, and the growing adoption of Bitcoin amongst institutional clients.
Islay Robsinson, CEO Enness Global, summarised, "When Tesla invests in an asset, as they did with Bitcoin in 2021 it’s a massive endorsement of its security and potential future value. So for the 85K who have already amassed a bitcoin holding worth in excess of £1m it makes a lot of sense to consider whether their digital currency can be used as collateral to support high-value financing, rather being sold to raise liquidity. Of course decisions like this are important to take counsel on, so I’m delighted our team are always on hand to help."
To find out more about how we can assist with asset-backed financing, or for advice on global million plus financing, contact Charles Bailey at [email protected].
Disclaimer: This article does not constitute financial advice. Enness does not provide investment or securities advice. We recommend seeking the advice of a wealth manager or professional adviser before investing in digital currencies.
The views and opinions expressed in this piece are those of the author and do not constitute advise or a recommendation. They do not necessarily reflect the official policy or position of Enness Global and are not intended to indicate any market or industry viewpoints, or those of other industry professionals.
Islay Robinson, a founder of Enness, is widely regarded as one of the UK's leading mortgage brokers. He has been instrumental in delivering some of the most complex and high value mortgages in the UK.
