Three Types of Crypto Owners
What Michael Lewis can teach us about Crypto
Reading Harry Potter is the best way understand how the crypto world feels about Sam Bankmen Fried. He is their Voldemort. Am I supposed to be typing that? He-who-must-not-be-named. They hate him.
Admittedly poorer for it, I am not a crypto believer. It’s either above my head, nobody’s telling me the compelling points, or I’m right to avoid it. But as a financial advisor, you probably have no choice but to talk about it.
Michael Lewis, writer of best sellers like Liar’s Poker, Moneyball, The Blind Side, and The Big Short; went deep into the crypto world when he followed around Sam Bankmen Fried as he profiled him for his new book: Going Infinite: The Rise and Fall of a New Tycoon. Astonishingly Michael was there as SBF and FTX fell.
Useful to you, might be how Lewis described crypto investors. He puts them into three buckets:
True Believers
Traders
Opportunists
Whenever talking to anyone about crypto, try and identify which bucket they are in. It will shape the conversation you are having. Perhaps you could create a fourth bucket that people like me would fall into “skeptics”. More on that Friday.
True Believers really think there are huge benefits of crypto currencies vs fiat currencies. Their tune has evolved over time as to what the main benefit is, but a lot of technologies work that way. These people see a future where decentralized crypto currencies will essentially overtake fiat money.
Like religion, there are ranges of true believers. You have your crazies who are so diehard its basically unbearable to be around them, good luck to you if they know you’re a skeptic, you’re essentially labeled an enemy. Then you have your moderates who are true believers, might try and convert you, but also accept it might not be important for everyone to believe.
Traders don’t really care at all about crypto currencies. They might be able to hang out with true believers, but really, they will buy and sell anything they think they can make money on. They enjoy the game of it. It’s more fun than wall street because there are less rules. Compared to the traditional stock market, the crypto casino isn’t as big, has some clunks to it, but its open 24/7 and you can buy and sell some wild stuff. Traders might be skeptics, might be true believers, it doesn’t matter. It is a game to them and a game they think they can win.
Opportunists are the ones you are most likely to talk to. This word could be replaced with FOMO’s and you’d get the point. Everybody else is doing it, they make money, my stocks don’t go up that much, maybe I should own some too. Some will attempt to pretend like they really understand blockchain, some won’t even pretend they will admit they just want to make money like everybody else.
When working with a client. It would be crazy to lose a client who just really wants to own crypto. Keep it to something less than 5% initially, and let it run if it takes off. Maybe it goes up so much it makes up half of their portfolio. But I would constantly caution clients to be…cautious. Offer to sell down gains, and rebalance, if they don’t want to, let it run. Think how mad clients get when their portfolios are down 10%. How will they act if they wake up one day, and on no news, it’s just gone. Not even down, I mean stolen or something. There is a history of that happening in crypto (see FTX). While established financial companies are offering the ETFs now, there really isn’t any history of them being able to ensure your assets are safe, and financial companies do have a history of falling subject to fraud themselves.
If you’re a financial advisor I can’t predict who your top 10 clients will be in 20 years, but I can predict that you will meet one of them in 2025 if you partner with Nexruto.
Nexruto offers seminar marketing services to financial advisors looking to target high-net-worth couples. We are the only seminar marketing service that offers customizable territories and firm branded ads. Meaning potential clients see your logo, not ours, and you market to who and where you want. Our process is compliance friendly.
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