‘Diamond hand’ diversification: A guide to high-net-worth investing in crypto
Jun 17, 2025・6 min read
Building wealth goes beyond earning a high salary. It’s also about putting that income to work. That’s why ultra-high-net-worth and high-net-worth individuals (UHNWIs and HNWIs) typically don’t rely on savings alone. Instead, they diversify across multiple asset classes to grow and protect their wealth over time.
Diversification has long been a key investment strategy, but building a strong portfolio takes more than just spreading money around – it requires the right balance of risk and return. One emerging area of interest for ultra-high-net-worth and high-net-worth investing is cryptocurrency.
In this guide, we’ll explain how UHNWIs and HNWIs approach crypto investing and some of the strategies they use to grow and preserve long-term wealth.
What’s a high-net-worth individual (HNWI)?
A high-net-worth individual (HNWI) is someone with substantial financial resources, typically including multiple income streams and a range of investments. While the exact threshold may vary by financial institution, the standard definition of an HNWI is having $1 million in liquid (investable) assets. In other words, if an HNWI were to cash out everything in their portfolio, they could easily access $1 million in spendable funds.
Most HNWIs grow and maintain their wealth by investing in a mix of assets. While many still choose traditional options like stocks and bonds, more are turning to alternative assets – especially cryptocurrencies. This trend is even more pronounced among very-high-net-worth individuals (VHNWIs), who hold $5–30 million in assets, and ultra-high-net-worth individuals (UHNWIs), who hold $30 million or more. Many in these tiers are drawn to crypto’s potential for strong returns and its independence from traditional market swings.
How do high-net-worth individuals invest in crypto? The UHNWI and HNWI approach to digital assets
As cryptocurrencies become more accessible and widely accepted, HNWIs are increasingly exploring this digital frontier. Recent data suggests that approximately 38% of HNWIs in the United States believe their investment strategies will eventually include blockchain-based assets – and at least 26% already hold crypto. From new income streams to high-growth potential, there are several reasons these investors are entering the space:
Diversification
Cryptocurrencies offer HNWIs a way to invest in assets outside mainstream finance. Because digital assets use peer-to-peer (P2P) blockchains rather than centralized institutions, they aren’t correlated to traditional markets. This diversifies their portfolios – helping reduce overall risk and providing a potential buffer against market-wide downturns.
Inflation hedge
Many investors consider some cryptocurrencies like Bitcoin (BTC) “safe haven” assets, thanks to their scarce total supply and gradually diminishing issuance rate. While there’s ongoing debate about their effectiveness as an inflation hedge, the potential for long-term wealth preservation is a major draw for HNWIs.
High return potential
Many HNWIs invest in crypto because of its price swings. While not every project delivers significant gains, those that do can generate big returns – making crypto appealing to investors comfortable with risk.
Passive income potential
HNWIs can also use cryptocurrencies to generate passive income while they wait for more favorable market conditions to sell. Strategies like yield farming, crypto loans, and staking allow investors to earn interest on their holdings without having to sell off their core assets.
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The growth of decentralized finance (DeFi)
Decentralized finance (DeFi) is one segment of the crypto market where HNWIs are beginning to concentrate significant capital. Despite its risks compared to more traditional high-net-worth investing strategies like holding Bitcoin, DeFi offers unique features that appeal to many investors seeking diversification and enhanced returns.
Higher yields
DeFi protocols are known for offering significantly higher yields than traditional income-generating instruments like bonds. To attract liquidity to their platforms, decentralized applications (dApps) often offer lucrative annual percentage yields (APYs) for activities such as liquidity provision in pools and crypto lending. These high APYs can help HNWIs maximize returns while retaining control over their assets, but investors should always be cautious of untested DeFi protocols or dApps that promise unrealistic returns. Scam activity remains a major risk in DeFi, and there are typically no insurance protections to mitigate potential losses.
Access to global financial markets
Unlike traditional financial institutions, HNWIs don’t have to go through checks and balances to access global liquidity on DeFi. Whether lending, borrowing, or contributing to DeFi protocols, HNWIs have 24/7 access to global markets thanks to blockchain’s borderless nature.
Transparency and security
Although DeFi isn’t immune to hacks, it boasts a few unique security features. For example, DeFi dApps on public blockchains like Ethereum (ETH) display all transaction data on distributed ledgers. Additional safeguards like smart contract audits and proof-of-reserves (PoR) also help build trust in DeFi protocols.
Reduced fees
While Ethereum-based DeFi has a reputation for high gas fees during network congestion, alternative chains now offer much lower costs. Even on Ethereum’s mainnet, transaction fees are often competitive compared to those that traditional financial institutions charge.
Non-fungible tokens (NFTs) and the evolution of asset ownership: Ultra-high-net worth investing in NFTs
Non-fungible tokens (NFTs) are one of the more niche investment ideas within cryptocurrency. Unlike their “fungible” counterparts, NFTs don’t have a 1:1 exchange value on their respective blockchains because each contains unique, non-duplicable metadata. While many high-profile NFTs feature animated avatars, the use cases for NFTs are nearly limitless. Whether UHNWIs or HNWIs are buying or creating them, NFTs offer new ways to manage and verify ownership rights.
Digital art and collectibles
There’s nothing new about HNWIs investing in fine art and collectibles. In that sense, buying NFTs tied to digital artwork is a modern take on this age-old investment strategy. HNWIs are most likely to consider NFTs offered through auction houses like Christie’s or associated with celebrities – like the Bored Ape Yacht Club (BAYC) – as viable investments.
Innovations like fractional NFTs also allow multiple investors to share ownership of a high-value digital asset. This makes it easier for HNWIs to “loan” or sell a portion of their NFT to other investors, creating new opportunities to unlock liquidity and potentially earn passive income without giving up full ownership.
Prestige and status
Like luxury watches or high-end cars, exclusive NFTs serve as both a way to store value and a status symbol. In some cases, these NFTs also function as passes to gated VIP communities. For example, VeeFriends NFTs grant holders special perks and entry to entrepreneur Gary Vaynerchuk’s VeeCon. These high-profile NFTs can offer HNWIs unique networking opportunities that go beyond the digital asset itself.
Tokenized real estate
One of the traditional drawbacks of investing in real estate is its lack of liquidity. NFTs make it possible to tokenize real-world property and divide ownership into tradable fractions. This opens up new opportunities for HNWIs to diversify their real estate holdings and collaborate with a global pool of investors. Whether buying homes, transferring ownership, or unlocking liquidity, tokenized real estate makes property investment more flexible and accessible.
The future of HNWI investing in crypto
As crypto compliance regulations become clearer – and more institutions offer access to digital assets – HNWIs have more reason to trust in the legitimacy of the industry. Embracing blockchain now helps investors stay future-proof, well-diversified, and positioned for the rapid growth possible in this evolving sector. The broader web3 ecosystem also presents new opportunities for HNWIs to generate cash flow, including staking, yield farming, and even running crypto mining operations.
That said, HNWIs don’t need to dive deep into web3 to gain crypto exposure. For example, the launch of spot Bitcoin ETFs in the U.S. allows investors to access BTC price movements as easily as buying shares through a traditional brokerage. There are also other regulated options for indirect exposure – such as crypto derivatives or equity in crypto-focused companies like Coinbase, Robinhood, or MicroStrategy.
However they choose to engage, it’s clear that more HNWIs are incorporating crypto into their strategies each year. With cryptocurrency’s explosive growth and continued momentum from regulatory and usability improvements, many are looking to get into position ahead of web3’s next wave.
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Disclaimer: This post is informational only and is not intended as tax advice. For tax advice, please consult a tax professional.