The Upside to This Crypto Winter

The last crypto winter lasted nearly three years, followed by tremendous growth. Digital currencies gained mainstream attention during this growth cycle, partially because they were becoming readily available to the average consumer. Fintechs made access easier, and new investors flooded the market resulting in even more momentum.

Today, we’re facing another winter, and not just for crypto, given the lack of economic stability, inflation and rising interest rates. Analysts say that crypto winters usually begin when there is a steep sell-off from an all-time high in the price of Bitcoin, the world’s largest digital coin by market capitalization. It’s hovering around 30% of the November all-time high (over $67,000). Indeed, most digital currencies have suffered brutal declines, losing $2 trillion in value since the height of 2021.

There are opportunities to take advantage of this winter, and plan for the inevitability of spring. A whole class of investors from millennials and Gen Z have experienced their first big market downturn. Unbridled optimism looks naive now with hindsight, laser eyes on Twitter profile pictures have all but disappeared. These consumers will still invest but they will be approaching it very differently going forward and it will be more thoughtful, systematic and long term. Something credit unions could do well to position themselves as an alternative to third party investment apps that look a lot like gambling services vs wealth management.

The market’s slowdown presents an opportunity for credit unions to experiment and fill a market gap primarily dominated by non-bank providers, such as Coinbase and Robinhood. Credit unions will need to consider a range of wealth management solutions, cryptocurrency included. These solutions can provide less risky options for members who may withdraw their crypto investments, while allowing others to still hold these investments and remain optimistic about its long-term potential.

Credit unions can start this process slowly. For instance, consider embedded wealth management solutions that help members manage both alternative assets and traditional equities. Members can invest in a variety of different digital currencies, in addition to other alternative assets like NFTs, gold and silver coins, bars and even fractional shares of precious metals. Others may choose stocks or traditional funds. Ideally, credit unions should be prepared to offer diverse and personalized investment options to help members build their portfolios, according to their risk tolerance and interest.

Offering diversity in investment strategy is about more than optionality, it also supports members through all stages of their wealth-building journey. Providing access to alternative assets and traditional equities, along with hybrid and self-directed options, helps members navigate changing market conditions and build more resilient portfolios. Diversity is the bedrock of responsible investing. It’s much more responsible than a financial institution that choses to “push” one coin or another.

Well-rounded digital wealth management strategies will help protect banking relationships from third parties advancing their market share during this downturn. Members want to build diverse portfolios on a simple, secure platform. Credit unions can meet this need if they reevaluate their investment strategies and think beyond cryptocurrency to help members lower risk while growing wealth. Look for opportunities that will help drive engagement, boost loyalty and improve the long-term wealth of members. Investments made today will pay dividends throughout members’ lifetimes.

Ben Soppitt is Founder and CEO of Unifimoney, a San Francisco-based provider of an investment and money management platform for community banks and credit unions.