'Modern banking is a confidence game' and the wealthy buy Bitcoin because it's 'outside of that system' - Steven Lubka
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(Kitco News) - Wealthy investors and the private investment offices that serve them are moving into Bitcoin in a big way, according to Steven Lubka, managing director and head of private clients and family offices at Swan Bitcoin.
“Since the collapse of Silicon Valley Bank we've seen a huge uptick,” Lubka said. “We've always had a slice of family office clients that have used the platform, but ever since SVB that has massively increased. These people are taking large Bitcoin positions.”
Swan Bitcoin offers automated Bitcoin savings plans and instant purchases through their app, and their Swan Private service also provides tailored Bitcoin investment for family offices, the private wealth management firms that serve high-net-worth individuals (HNWI) and their families. HNWI are investors who have at least $1 million in liquid financial assets.
Lubka spoke with Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News, at Bitcoin Miami earlier this month. He said many wealthy and knowledgeable investors are coming to Swan to learn about Bitcoin and to take significant stakes in it. “It's a sign that to smart, sophisticated investors, Bitcoin is a legitimate asset to own in their portfolios.”
Family offices are early adopters
Lubka believes this is significant because among all the firms in institutional capital, family offices have the most control and the fewest restrictions over their ability to invest in alternative assets.
“Hedge funds and some of these other institutions, there's a lot of compliance,” he said. “Family offices can just do what they're going to do, and so if you were to imagine who's going to be the early adopter in the institutional segment, you're going to say it's going to be family offices, and that's what we're seeing.”
Banking crisis shook HNWI confidence
Lubka said wealthy investors were spooked by the onset of the banking crisis in March, and their trust in traditional finance has been shaken. He added that the banks’ reaction to their own weakness didn’t help them. “Modern banking is a confidence game, and that's why banks immediately jump to blame depositors for withdrawing their deposits,” he said.
High net worth investors and family offices “are concerned about long-term stability in the financial system,” Lubka said, “and they want to own an asset that is outside of that system.”
He said that when Bitcoin went up as the banks failed, it was a signal that investors believed Bitcoin was a legitimate asset to own. “That wouldn't have happened in the same way, I don't think, five years ago,” he said.
Bitcoin’s bright future
He believes that Bitcoin will become widely adopted as a global store of value, and once that happens, it will be used by the world for a long, long time. “ It will be a generational time frame, multiple human generations,” he said. “Your grandkids will use Bitcoin, their children will use Bitcoin.”
Lubka is also very bullish on the near-term prospects for the leading cryptocurrency. “We’ll have $100,000 Bitcoin by the end of 2024,” he said.
To hear Lubka’s outlook on the Fed’s rate cycle and how gold and equities will perform, watch the above video.