“Bitcoin is traded with ten times the volatility of stocks, so it’s a wonderful trading instrument,” said Stefan Schwitter, Head of Investment Solutions at Seba Bank, to Citywire Switzerland. Conversely, this means that cryptocurrencies are not very suitable for buying and holding. Their merits are elsewhere.
It may be possible to buy and hold Bitcoin, but the head of investment solutions at Seba Bank does not recommend putting together a crypto portfolio with ten coins and holding it for the next five years. “It’s not like investing in Johnson & Johnson or Nestlé.” The world of cryptocurrencies is new, exciting and changing at breakneck speed.
Stefan Schwitter sees these qualities as an opportunity. “Cryptocurrencies are great to trade, both in terms of volatility and the combination of currency pairs they offer.” You also have dealers as customers, but your team cares more about investors or asset managers.
Due to an unprecedented scenario with negative interest rates, the latter looked for diversification. Just as wealth managers deal with private markets and gold, they should discover the diversification benefits of cryptocurrencies.
Apparently Schwitters’ request did not go unheeded: “12 to 18 months ago we called asset managers in banks and family offices and met with great skepticism. In the last six to nine months we have received a lot of support – either because they are this new asset class discovered for themselves or because customers ask for it. ” (See article “Bitcoin is overtaking gold as an alternative investment” by investrends.ch from the beginning of the week.)
However, the pace was not the same for all players: Family offices would have used crypto earlier than independent asset managers and banks. Just 18 months ago, Sega spoke with family offices about building a 3 to 5% allocation in crypto currencies and converting the gold allocation to Bitcoin. In the case of independent asset managers, this has only happened in the last twelve months, and usually only because their customers have specifically asked about Bitcoin.
Schwitter emphasizes that while there is increasing demand for cryptocurrencies from more traditional banking players, it is important to show that there is “a trustworthy way” to access the currency.
For example, Seba Bank has entered into partnerships with other banks. For example, she supports Bank Julius Baer in offering its customers solutions for digital assets.
“When we founded our company, we counted on two things,” says Schwitter, the finance portal Citywire Switzerland: “That crypto currencies would revolutionize the market and that the entry threshold for traditional asset managers would be very high.” For this reason, a Swiss banking license was obtained.