Shalini Nagarajan

More female retail investors have reported holding digital assets, even as trading volumes slumped and prices remained depressed amid the crypto winter. 



Investing platform eToro released a survey Monday that indicated the total portion of retail investors holding crypto in 2022&#8217;s fourth quarter rose to 39% from 36% in the previous period.



The report surveyed 10,000 retail investors throughout mid-December across 13 countries, including the UK, US, Germany, Netherlands, Norway and Romania. 



34% of responding female retail investors reported owning crypto, up from 29% in Q3 2022. Growth in the percentage of men holding crypto was slower.



“Crypto is now the second most widely owned asset class for women after cash, suggesting it is succeeding where traditional financial markets have sometimes failed in bringing more women to the table,” eToro global markets strategist Ben Laidler said.



Older investors also saw an opportunity to buy the dip, the study noted. Cryptoasset holders between the ages of 35 and 54 both rose by five percentage points in the fourth quarter.



“Retail investors were defined as self-directed or advised and had to hold at least one investment product including shares, bonds, funds, investment ISAs or equivalent. They did not need to be eToro users,” the firm <a href="https://www.etoro.com/wp-content/uploads/2023/01/ETORO-RIB-JANUARY.pdf" target="_blank" rel="noreferrer noopener">said</a>.



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2022 was a tough year for investors. The global economy was caught in steep challenges including Russia’s invasion of Ukraine and inflation remained a drag on the cost-of-living crisis.



Retail investors overall chose to move to defensive allocations and raised their cash allocations. In terms of stocks, they seem to hold a long-term investment horizon for technology and the commodities sectors.



Laidler further wrote on <a href="https://twitter.com/laidler_ben/status/1617425355610157060" target="_blank" rel="noreferrer noopener">Twitter</a> that the survey showed the resilience of retail investors, “with confidence starting to rebound as inflation falls, and looking to boost tech and crypto.”



The survey separately showed a majority of young investors are approaching the market with a positive view, with 23% indicating an increase in investing appetite. Meanwhile, only 6% of the late 50s cohort expressed similar interest.



“They [young investors] are naturally more risk tolerant and have longer to retirement. But also facing their first prolonged equity bear market,” Laidler said.



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Crypto Trumps Stocks for Female Retail Investors: Survey

Jack Kubinec

<div id="highlights-block_6321f0541d004" class="highlights">
 <ul>
 <li>Nansen’s Merge report showed smart money ether holdings rising since June</li>
 <li>“Ethereum is taking over and smart money is jumping ship [away from Bitcoin] quickly,” a digital asset investor said</li>
 </ul>
 
</div>



Crypto’s largest investors have been buying ether ahead of <a href="https://cms.blockworks.co/tag/ethereum-merge" target="_blank" rel="noreferrer noopener">the Merge</a>.



Ethereum’s upgrade from proof-of-work to proof-of-stake is imminent, and investor jitters along with potential forked ether tokens have led to outflows of ether from <a href="https://cms.blockworks.co/dreams-of-forked-ether-have-defi-dapps-preparing-for-nightmare-scenarios/" target="_blank" rel="noreferrer noopener">lending platforms</a> in recent days. But <a href="https://cms.blockworks.co/ethereum-merge-may-spur-more-institutional-interest/" target="_blank" rel="noreferrer noopener">institutional investors</a> and deep-pocketed “whales” have accumulated ether and staked it in recent weeks, <a href="https://cms.blockworks.co/investors-bullish-over-ethereum-merge-disinflation-narrative/" target="_blank" rel="noreferrer noopener">signaling confidence</a> that the Merge will be successful.



Nansen researchers noted a steady buy trend since mid-August among whales and “smart money” alike. The blockchain analytics platform <a href="https://www.nansen.ai/nansen-101/introducing-smart-money" target="_blank" rel="noreferrer noopener">defines</a> smart money as crypto traders it considers “experienced, well informed or ‘in the know’” — such as <a href="https://www.nansen.ai/research/following-the-nerds-understanding-smart-money-labels-and-how-to-use-them" target="_blank" rel="noreferrer noopener">funds and large liquidity providers</a>.



<figure class="wp-block-image"><img decoding="async" src="https://lh6.googleusercontent.com/uhTx68jZz40Fk7SAOYKUqy0fSF6Jq0-R7bEt-q3_MRRSK9IdyqSlsYbK-lAkGJZUeuEcEB6DM-5gRew1cOc-qIsSxKHbv8isk73_Ba1km6jpMVHdgpvmCZunnIvRgs_Ae1SOcrw9SP8FMag3hJx1zDZ6hPCcmbNP_rKdcbPyLsl0-Ru-BKqUL1M1MA" alt=""/><figcaption>Ether holdings on the rise since June; Source: <a href="https://docs.google.com/document/d/1Lfb2oXwepb6PKu0Zl9j1jSOSHrddUurtamdHUAXPgKY/edit#" target="_blank" rel="noreferrer noopener">Nansen Merge Report</a></figcaption></figure>



It’s unsurprising that investors who already own large amounts of ether are bullish on Ethereum’s Merge. But it appears that institutional investors across crypto see a buying opportunity.



“I’ve seen today, for example, a major fund [which is] one of our investors buying Coinbase staked ETH at a discount,” Will Harborne, CEO of the crypto exchange Rhino.fi, said, adding he finds <a href="https://cms.blockworks.co/ethereum-split-is-possible-but-many-remain-optimistic-about-the-merge/" target="_blank" rel="noreferrer noopener">fears of fork-related turmoil</a> following the Merge “boring.”



<blockquote class="wp-block-quote">“The Merge is going to be successful. It’s definitely going to be really smooth,” Harborne said.</blockquote>



Smart money may be more fearful of the broader macro environment than of software bugs, especially as the latest US inflation figures came in <a href="https://cms.blockworks.co/bitcoin-loses-6-equities-fall-as-inflation-exceeds-estimates/" target="_blank" rel="noreferrer noopener">higher than expected</a>. The Merge has created a perception that ether is the safest bet in the bear market, according to Max Williams, chief operating officer at Runa Digital Assets.



“Given the macro backdrop, [the Merge] is the best catalyst” for crypto, Williams told Blockworks. “In the bear market, [traditional wisdom says] hold onto the safest assets, which has really meant bitcoin, but [ether] is taking over and smart money is jumping ship quickly.”&nbsp;



Ethereum post-Merge still faces a shaky macro outlook, and Williams predicts staked ether yields will fall over the next year, barring a dramatic rise in activity on the Ethereum network.&nbsp;



But smart money evidently still finds proof-of-stake Ethereum worth the risk.



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Smart Money Has Been Buying the Ethereum Merge Narrative

Sebastian Sinclair

<div id="highlights-block_62a0357d26311" class="highlights">
 <ul>
 <li>Cryptocurrency can be used to deem an individual as an accredited investor in Singapore recognized as net personal assets</li>
 <li>An accredited investor needs to meet one of three criteria above a particular financial threshold to qualify</li>
 </ul>
 
</div>



Capital markets platform ADDX said Wednesday it has become the first financial institution in Singapore to recognize cryptocurrency for the purposes of onboarding accredited investors.



In a statement, ADDX said it will begin recognizing bitcoin, ether and USDC for individuals as part of the city&#8211;island-state&#8217;s &#8220;accredited investor&#8221; status. Under Singapore law, investors seeking accreditation are required to meet a certain threshold to be granted access to particular financial products.



An accredited investor is an individual with a special status under financial regulation laws with differing regulations depending on the country or jurisdiction.



One of three criteria qualify an investor for such a status in Singapore including if their income in the previous 12 months exceeds SGD 300,000 (US$218,000), or their net worth of financial assets exceeds SGD 1 million (US$727,000). A third option, that an individual&#8217;s personal assets exceed SGD 2 million (US$1.45 million), also counts.



Cryptocurrency is not currently recognized within the city-island-state as either income or financial assets though they are recognized as net personal assets. ADDX said it will implement appropriate risk management measures within the eyes of the law, taking into account price volatility.



Monetary Authority of Singapore-regulated ADDX also said it will only recognize cryptos with a higher market capitalization and will apply a discount rate when valuing the assets to offset any potential risk.



&#8220;With a large minority of investors owning crypto, it is reasonable for these digital assets to be recognized as a part of one’s portfolio,&#8221; said ADDX&#8217;s CEO Oi-Yee Choo in the statement. &#8220;Recognizing crypto holdings helps us to serve a much wider segment of investors.&#8221;



Founded in 2017 with operations commencing in 2020, ADDX has grown to become one of Southeast Asia&#8217;s largest private market platforms by total trading volume, offering assets not readily available on public exchanges. 



Leveraging the use of blockchain tech and smart contracts, the platform tokenizes a wide array of assets from equities to bonds as well as pre-IPO equity and hedge funds.



Choo added that reaching an understanding between crypto tech and traditional finance had positioned the firm ahead of typical offerings by enabling it to bridge two worlds.



Choo was appointed as the platform&#8217;s head in March in a move from UBS, where she was charged with leading the bank&#8217;s investments in Singapore.



&#8220;Investors increasingly expect a seamless view of their complete holdings because their traditional wealth and crypto wealth ultimately belong to a single portfolio,&#8221; she said. &nbsp;&#8220;In time to come, we are likely to enable customers to fund their investment wallets with cryptocurrencies and to convert their assets between fiat currencies and crypto.&#8221;



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Singapore’s ADDX Recognizes Crypto for Accredited Investors

Ben Strack

<div id="highlights-block_626742f71fddd" class="highlights">
 <ul>
 <li>Increased education leading to increased trust is a positive for crypto’s long-term potential, Bitstamp US CEO says</li>
 <li>Uncertainty over regulation remains the key barrier to crypto investing</li>
 </ul>
 
</div>



Eight out of 10 institutional investors believe that crypto will overtake traditional investment vehicles within a decade, a survey by crypto exchange Bitstamp found.



The company’s Crypto Pulse survey also discovered that 54% of retail investors believe that cryptocurrencies will overtake traditional currencies within 10 years.



“The survey results show that crypto is a long game and we need to be building for the next 50 to 100 million customers,” Bitstamp US CEO Bobby Zagotta told Blockworks. “The industry needs to enable the infrastructure that supports that next wave of investors.”



The survey reflects the opinions of roughly 28,000 respondents — about 5,000 institutional investment strategy decision-makers and 23,000 retail investors — across 23 countries.



It found that crypto is trusted less than property ownership, which is trusted by about 80% of retail investors and institutions. Shares and stocks are deemed trustworthy by about 69% and 77% of retail investors and institutions, respectively.



Still, 67% of retail respondents believe crypto is a trustworthy investment, while 70% of institutional investor respondents said they trust it. Of the latter group, 68% actively recommend crypto in investment strategies.



Decentralized finance (DeFi) investment vehicles, including stablecoins, non-fungible tokens (NFTs) and blockchain networks, have trust ratings of roughly 60% across retail and institutional investors.



“As people learn more about crypto, they tend to trust it more,” Zagotta said. “This is extremely positive when you think about crypto’s long-term potential.”



Individuals and institutions in emerging economies are more likely to trust crypto — with nearly 80% reporting they do, compared to 62% in more developed financial markets.



Regulation remains a barrier to crypto investing, according to respondents. Nearly half of retail investors and more than a third of institutional investors consider crypto to be unregulated.



President Biden <a href="https://cms.blockworks.co/bidens-crypto-executive-order-may-be-watershed-moment-despite-lack-of-specifics/" target="_blank" rel="noreferrer noopener">signed an executive order</a> last month tasking a swathe of government agencies to collaborate on studying responsible regulation of digital assets. 



Zagotta said that certain facets of crypto regulation should be non-negotiable, such as maintaining blockchains’ transparency, prioritizing privacy and remaining independent from third parties.



“Given the executive order and recent legislative activity, the topic is certainly hot in Washington,” he said. “We expect more regulation…in the coming months.”



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80% of Institutions Bullish on Crypto’s Future, Survey Finds

Casey Wagner

<div id="highlights-block_6201889b95c43" class="highlights">
 <ul>
 <li>Investors may not have earmarked enough cash to meet crypto tax bills</li>
 <li>For many retail traders, it’s difficult to first discern how much they owe</li>
 </ul>
 
</div>



As tax season ramps up, cryptocurrency accountant eyes are on looming tax bills that investors may not have earmarked enough cash for.



“If people are liquidating coins to come up with the cash for taxes for 2021, that also creates a taxable event for 2022,” said Shehan Chandrasekera, head of tax at Coin Tracker. “It’s going to get messy.”&nbsp;



As retail investors report 2021 cryptocurrency trading activity, they might be surprised by their tax bill — particularly newcomers, Ledgible CEO Kell Canty said.



“Come April 15, a lot of investors are going to see that they had a taxable event where they either sold crypto for crypto or sold crypto for USD, and they didn&#8217;t allocate any portion of that to satisfying the capital gains,” Canty said.



It can be complicated to track and report gains, Canty said, especially in cases where investors shifted profits from one token to another. The recent selloff has compounded those concerns, leading to the possibility that underwater, cash-starved investors won’t be able to satisfy their tax obligations.



“It&#8217;s unfortunate,” Canty said. “That&#8217;s why people need to be more thoughtful about planning that and using tools to track all of their crypto across all different exchanges and wallets and custodians and DeFi protocols to get a sense for the realized and unrealized gains that they have.”



Aside from figuring out how to pay taxes, retail investors may have a hard time pinning down how much they owe, according to Chandrasekera.



“Reporting is a huge problem right now, because exchanges are doing different things,” Chandraseker said. “If you take a look at centralized exchanges, they issue, I would say, four different types of tax forms, depending on how they interpret the existing tax codes, given the gray area, so people are very confused.”



Investors using decentralized exchanges or more than one exchange may have a particularly difficult time.



“Exchanges only have visibility into what&#8217;s happening inside that exchange,” Chandrasekera said. “But to figure out your taxes correctly, you need to connect all your wallets and exchanges and figure out that actual capital gain or loss.”



There is precedent for retail investors liquidating holdings for the tax man, said Jordan Bass, owner of Taxing Cryptocurrency.



“In 2018, there was a big top in crypto markets, then the price retraced in February, we had a little bit of a pump into March and then in April, when we were leading into tax planning, we saw a significant retracement,” Bass said. “I think maybe there was some correlation.”



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