London has almost three times as many investors considering cryptocurrency investments as the rest of the country, according to a new survey of over 1,500 UK investors commissioned by Rathbone Investment Management.
Three in ten (30%) London investors are planning crypto-currency investments in the near future compared with 12% nationwide, with one in eight (13%) attributing their current wealth to cryptocurrency (4% nationwide).
Since the introduction of Bitcoin in 2009, crypto-currencies have multiplied in number and popularity. Investors have primarily been attracted to the potential high returns that can be achieved by investing in crypto-currencies as well as the anonymity and protection that decentralised online currencies can provide.
While interest in cryptocurrency has been high, the proportion of the investors surveyed by Rathbones that currently had their wealth invested in cryptocurrencies was a meagre 3% nationwide. In London, however, this figure more than trebles, with 10% of London investors surveyed revealing they were currently investing in cryptocurrency.
The findings come as part of wider research which found that, nationwide, younger investors are more likely to be attracted to investing in crypto-currency than older generations. 37% of under 35-year olds were planning to invest in crypto-currencies in the future compared to just 4% of over 45-year olds.
Further, the research found that almost a third (30%) of investors with investable assets of over £100K said they have invested in cryptocurrencies, and of those just over half plan to invest in crypto-currencies in the future.
The merits of Bitcoin and other cryptos have been much debated – particularly in the media – and while interest in online currencies is high, very few investors count these investments as a significant proportion of their portfolio. While 10% of London investors currently had wealth invested in cryptocurrencies, this was well below the proportion that had money in a cash ISA (36%), or a stocks and shares ISA(36%).
Robert Hughes-Penney, Investment Director at Rathbones comments: “Lucrative returns made by the early adopters of Bitcoin and other cryptocurrencies have been widely publicised. These early investors have been followed by others looking to make similar gains.
These figures suggest there are a number of investors in London with shorter investment goals who have been more susceptible to the ‘Bitcoin craze’, while outside of the capital investors have mostly stayed clear of what is a high-risk asset class.
“Buying crypto-currencies can come back to bite you. The bursting of the Bitcoin bubble this year is a clear reminder of just how volatile these investments can be. While it can be interesting to dabble in alternative asset classes such as crypto-currencies, and the rewards can be there if you are lucky with timing, we would not advise them to be a core part of an investment portfolio, which should be diversified in order to spread risk. The due diligence given to crypto-currencies is nowhere near as rigorous as it is to more traditional asset classes such as equities and the risk is correspondingly much greater. The majority of investors will have a long-term goal in mind – whether that be saving for a first-time home, retirement or education – and that, along with a person’s appetite for risk, should always be taken into account when making investment decisions. If in doubt, talk to a financial expert.”