Tag: Wells Fargo

Crypto Becomes Valid Portfolio Options and Assets Diversifier , Says Wells Fargo’s Subsidiary

by Blockchain News

Wells Fargo Investment Institute, a registered investment adviser and wholly owned subsidiary of Wells Fargo, recently released its fifth publication in its digital asset and cryptocurrency educational series in August, as seen on Sunday, August 7.

The investment advisory firm published the report to ensure that new investors see the comprehensive picture of the digital assets industry and therefore take advantage of investing in the new asset class.

As per the new report, Wells Fargo considers digital assets as a transformative innovation, just like the internet, cars, and electricity.

The investment adviser described cryptocurrencies as the building blocks of a new large digital network that moves money and assets. That network is open for anyone in the world to use. Wells Fargo said infrastructure is emerging to support this new Internet of Value.

Since traditional finance is starting to embrace open networks, adopting digital assets is expected to accelerate over the coming years.

According to Wells Fargo, early adopters are set to gain profitability (economies of scale), while those late comers could lose something that the internet has taught the world for 40 years.

The adviser stated that while there is an investment thesis behind digital assets, the industry is still young to become mature, and therefore, many investment risks remain.

The main risks facing the industry are additional regulation, technology and business failures, limited consumer protections, price volatility, as well as operational risks associated with handling and storing digital assets, the bank elaborated.

Wells Fargo said cryptocurrencies have evolved into a viable investment asset. Long-term supply and demand trends further support industry growth and compress price volatility. Crypto has therefore emerged to play a role as portfolio diversifier. The bank classifies cryptocurrency or digital asset investment as an alternative investment.

Crypto Increasingly Gaining Mainstream Adoption

In 2020, several crucial events attracted increased mainstream usage in transactions and accelerated the maturation of crypto markets. For example, banks received regulatory permission to custody cryptocurrencies. Regulators took additional steps to extend a legal and oversight framework that have helped solidify crypto as investable assets.

In 2020 and 2021, more operating companies such as MicroStrategy, the Block Inc., (formerly Square), Tesla, among others, began allocating cash to digital assets and cryptocurrencies.

This year, crypto continues to gain ground as an investment despite the market crash. According to a recent Morning Consult data intelligence and market research firm survey, about 24% of American consumers own crypto.

Research shows that clients are increasingly asking investment advisors about crypto – with 94% of financial advisors receiving questions about the asset class from clients in 2021.

Cryptocurrency should be part of clients’ portfolios as long as they can afford to lose that money and they are going to keep it for a seriously long period of time, according to Suze Orman, a US personal finance expert.

Many experts advise clients that cryptocurrencies should be about 5% of their portfolio and not more.

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Crypto Bank Silvergate Capital Receives Bullish Rating from Wells Fargo

by Blockchain News

Silvergate Capital, a crypto state-chartered bank based in California, has received a bullish rating from Wells Fargo, which initiated coverage on the digital asset company with an overweight rating based on rising interest rates and prospects for further growth in its exchange network.

In a note, Jared Shaw, a Wells Fargo analyst, stated that Silvergate provides an opportunity for investors. The report further mentioned that the ongoing institutional adoption of cryptos and product innovation should help maintain Silvergate Capital’s (SI) growth profile.

Shaw wrote in a note that the current bear market makes an attractive entry point for institutions investing in cryptocurrencies. “As rates rise, higher spread income will come from a zero-cost deposit base, and further growth in SEN Leverage and the rollout of an SI-issued stablecoin payments network represent future opportunities,” the report stated.

Wells Fargo mentioned that the market is in the early stages of cryptocurrency and blockchain adoption. The note said that Silvergate offers a regulated and FDIC-insured platform for investors looking to on-ramp and off-ramp U.S dollars into the digital asset ecosystem.

The analyst pointed to Silvergate’s (SI) as the “biggest driver of deposits” and digital customer growth, as its client base has been growing at a 35%-40% rate year on year since 2019. The note further pointed out that Silvergate has developed a strong network impact via its Silvergate Network (SEN), which is used by some of the leading exchanges and institutions in the digital asset space. The report also stated that Silvergate plans to launch its own U.S.-based stablecoin payments platform late this year, unleashing new potential revenue opportunities.

The note stated that it “should drive much of the bank’s near-term profitability, as 77% of assets are securities (55% floating) and the loan book is also heavily floating-rate,” the note stated.

Wells Fargo’s view contrasts with its peers like Morgan Stanley, which gave Silvergate an equal weight rating last week.

Bitcoin Crashes Again

Wells Fargo’s ‘BUY’ rating for Silvergate comes despite the renewed crypto crash triggered by crypto lending platform Celsius’ pause on all withdrawals, swaps, and transfers between accounts due to “extreme market conditions.” Shares of Silvergate dropped more than 17%, and other crypto-focused stocks such as MicroStrategy and Coinbase collapsed during premarket trading on Monday as Bitcoin price plunged below $24,000 per coin.

Three weeks ago, the crypto market saw another worse selloff, exacerbated by rising interest rates and TerraUSD losing its peg to $1 and eventually leading to the collapse of both the stablecoin and Terra (LUNA).

Volatility continues to be the norm in crypto coins, and the latest fall witnessed on Monday is another reminder of that. But what is being done by payment systems and digital projects will continue to stabilize the market long term.

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Bitcoin Closes to Hyper-Adoption Phase similar to Mid-to-Late 1990s: Wells Fargo

by Blockchain News

It might be not too late to jump on the Bitcoin bandwagon because the leading cryptocurrency is just getting to the inflexion point of hyper-adoption, according to a special report by international financial services giant Wells Fargo.

The “Understanding Cryptocurrency” report seeks to tackle the disparity about either being too early or too late to invest in cryptocurrencies. Wells Fargo offers a conviction that cryptocurrencies are viable investment vehicles through a global investment strategy team, but they are still early in their investment evolution cycle.

Per the report:

“Cryptocurrency adoption rates look to be following the path of other earlier advanced technologies, particularly the internet. If this trend continues, cryptocurrencies could soon exit the early adoption phase and enter an inflection point of hyper-adoption … for the internet, that point was the mid-to-late 1990s.”

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Source: Wells Fargo

From 1996 to 2000, internet usage grew from 77 million to 412 million. By 2010, the rate had grown exponentially to hit 1.98 billion, with the current global internet use sitting at 4.9 billion.

Therefore, Wells Fargo believes it’s not too late to join the Bitcoin party despite the top cryptocurrency recording a compounded annual rate of 216% since its first transaction was recorded in 2010.  

The company noted:

“We see cryptocurrencies in the ‘early, but not too early’ investment stage, which is why we have emphasized investor education.”

The report added that shakeout events are the norm in the early stages of investing, and cryptocurrencies are not an exemption, with at least 1,700 or 40% going bust following the 2017 shakeout event.

“Early-stage investing is often fraught with violent boom and bust cycles, as many a dot-com company and investor can attest from 20 years ago. More than 16,000 cryptocurrencies exist today, and if history is any guide, many will fail (or at least fail to scale),” per the study.

In December 2020, on-chain analyst Cole Garner noted that Bitcoin was at a critical inflexion point in its adoption journey as institutional investors joined. 

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Crypto in Early Stages of ‘Hyper Adoption Phase’: Banking Giant Wells Fargo

by Dailyhodl

American banking behemoth Wells Fargo says the current state of cryptocurrencies is comparable to the internet in the mid-to-late 1990s.

In a new special report, the financial giant advises patience for investors looking to jump into the still maturing crypto space.

“For today’s investor trying to figure out if we are early or late to cryptocurrency investing, looking at technology investing in the mid-to-late 1990s seems reasonable. At that time, the internet hit a hyper-adoption phase and never looked back. Cryptocurrencies appear to be at a similar stage today. Cryptocurrency investment options today, however, are still maturing and we advise patience…

We do not recommend any of the other current investment options, such as mutual funds, ETFs, grantor trusts, and individual cryptocurrency speculation. We are hopeful that greater regulatory clarity in 2022 brings higher-quality investment options.”

The report doubles down on comparing blockchain technology to the internet, suggesting that cryptocurrencies are following the internet’s path from adoption to hyper-adoption.

“Cryptocurrency adoption rates look to be following the path of other earlier advanced technologies, particularly the internet. If this trend continues, cryptocurrencies could soon exit the early adoption phase and enter an inflection point of hyper-adoption, similar to other technologies seen in Chart 3.

Notice in Chart 3 that there is a point where adoption rates begin to rise and do not look back. For the internet, that point was the mid-to-late 1990s. After a slow start in the early 1990s, internet use surged from 77 million in 1996 to 412 million in 2000. By 2010, worldwide internet use had grown to 1.98 billion, and today it sits at 4.9 billion.”

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Source: WellsFargo

The Wells Fargo report suggests that cryptocurrency technology may even be further along than the internet of the late-nineties in terms of adoption.

“Chart 4 helps visualize why we believe that cryptocurrencies may have reached an adoption inflection point similar to where the internet was in the mid-to-late 1990s. Chart 4 compares global user growth between the internet, starting in 1993 (Chart 4, solid red line), and cryptocurrency users, starting in 2014 (Chart 4, dashed purple line).

Based on this comparison alone, it appears that cryptocurrency use today may even be a little ahead of the mid-to-late 1990s internet. Precise numbers aside, there is no doubt that global cryptocurrency adoption is rising, and could soon hit a hyper-inflection point.”

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Source: WellsFargo

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Global crypto adoption could ‘soon hit a hyper-inflection point’: Wells Fargo report

by Cointelegraph

Wells Fargo Investment Institute, the research division of Wells Fargo Wealth and Investment Management, has released a report highlighting the potential of cryptocurrencies as an investment opportunity akin to the early days of the internet. 

In a report today titled Cryptocurrencies — Too early or too late?, the banking giant referred to cryptocurrencies as “viable investments” today, but hinted there was no rush for investors to enter the still maturing market. Wells Fargo’s global investment strategy team said it did not subscribe to the idea that it was “too late to invest” in crypto, given that the space is “relatively young” in terms of other asset classes.

According to the banking giant, the technology behind crypto is following an adoption path similar to that of the internet in the early-to-mid 1990s, when “consumers still needed time to figure out what the technology is, what it can do, and how it can benefit them.” However, like the internet, the rising number of crypto users suggests “the world is beginning to embrace the technology — and quickly.” According to a Crypto.com study from July, the number of global crypto users more than doubled from 100 million in January 2021 to 221 million in June.

“If this trend continues, cryptocurrencies could soon exit the early adoption phase and enter an inflection point of hyper-adoption, similar to other technologies,” said the report. “There is a point where adoption rates begin to rise and do not look back […] Precise numbers aside, there is no doubt that global cryptocurrency adoption is rising, and could soon hit a hyper-inflection point.”

Source: Wells Fargo Investment Institute

The report added that the removal of regulatory roadblocks was also necessary for greater adoption, noting the environment was slowly changing to “solidify cryptocurrencies as investment assets.” The Wells Fargo team advised potential crypto users to be patient and use private placements for investments, as the types of vehicles currency available “are a bit behind and still maturing.” However, “higher quality investment options” could soon arise if regulatory hurdles are cleared.

“There is no need to rush, as most of the opportunity lies before us, not behind us […] We are hopeful that regulators may soon approve mutual funds and ETFs backed by the digital assets themselves — maybe as soon as 2022.”

Related: Recommending regulations: Crypto working groups make push for adoption

As of October 2021, the Wells Fargo Investment Institute offered guidance and advice on more than $2.1 trillion in assets. The firm announced last year it planned to onboard qualified investors to its crypto investment platform.