Are Traditional Markets Dying? Why High-Net-Worth Investors Are Jumping Ship for Crypto and Private Deals.
Alternative investing is no longer confined to the sidelines. J.P. Morgan’s “Alternative Investments in 2025: Our Top Five Themes to Watch” underscores just how fast this category is redefining portfolios for high-net-worth individuals and family offices. While private equity and real estate remain staples, private credit and cryptocurrency are emerging as legitimate contenders for new capital. In a telling sign of shifting investor sentiment, data from Grayscale Investments and The Harris Poll shows that high-net-worth (HNW) Americans are more likely to own crypto assets than the average U.S. investor, a clear indication that once-fringe investments have moved closer to the mainstream.
“Alternative markets are becoming not just a hedge but a central component of wealth strategies,” says Jennifer Larkin, a partner at Knightbridge Capital, which advises affluent families on their investment allocations. She points to private credit as an example of this evolution. With banks scaling back on lending, wealth managers are matching clients to businesses looking for capital infusions—often at attractive yields. “It’s both an opportunity and a risk,” Larkin adds. “Investors need to prepare for potential liquidity issues and do thorough due diligence to ensure the borrowers’ credit profile is sound.”
J.P. Morgan’s outlook suggests that while certain corners of real estate, such as logistics hubs and e-commerce–aligned developments, will remain resilient, others may struggle to recover from pandemic-era shifts in demand. Office space in particular has become a wildcard, with remote work reshaping tenant footprints. Meanwhile, infrastructure investments—from renewable energy projects to modernized public works—are drawing interest for their long-term, inflation-linked cash flows. “Infrastructure isn’t just about roads and bridges anymore,” says Carlos Estevez, co-founder of a Miami-based family office specializing in green energy. “Renewables, especially solar and wind, can lock in stable returns, provided you navigate regional regulations carefully.”
Alongside these relatively established plays, cryptocurrency stands out as the most controversial portion of the new alternative landscape. The Grayscale-Harris Poll data reveals that HNW individuals have adopted digital assets more quickly than some might expect, confirming what many in the wealth management sector already sensed: crypto has graduated from a speculative novelty to a serious component of forward-looking portfolios. Yet regulatory uncertainties and headline-making fluctuations in token prices have kept skepticism alive. “Crypto is high risk, and many families wouldn’t touch it five years ago,” says Estevez. “Now, our most sophisticated clients are investing in it strategically—often with a multi-year horizon.”
Even more provocative is the shift toward direct investments, where private investors bypass large funds to co-invest alongside entrepreneurs or smaller syndicates. Advocates say going direct fosters deeper engagement and potentially outsized gains if a startup succeeds. Critics maintain the absence of institutional oversight could increase exposure to unvetted ventures or even fraud. “Direct deals can be a double-edged sword,” warns Larkin. “When a major buyout fund invests, you get the benefit of professional diligence. When you do it alone, you have to replicate that diligence—otherwise, it’s just guesswork. But for investors with the right expertise, direct involvement can bring a sense of purpose and control that a conventional fund might lack.”
For many observers, the real question is whether these alternative strategies will prove resilient if the broader economy wobbles. After all, alternatives often come with longer lock-up periods, limiting liquidity. Larkin notes that her firm routinely stresses to clients the importance of having sufficient access to cash for short-term liabilities before jumping into multi-year private deals. “Alternatives aren’t one-size-fits-all,” she says. “They can be enormously rewarding, but you don’t want to find yourself strapped for liquid assets at a critical moment.”
Despite these cautionary notes, the diversification argument carries weight. In an environment where interest rates remain uncertain and public market valuations appear stretched, adding uncorrelated assets becomes increasingly appealing. J.P. Morgan’s analysis points to a world where private financing, infrastructure development, and select technology-driven ventures can offer stable or even outsized returns while public equities and bonds battle macro headwinds. The additional twist is the potential for investors to shape industries at an earlier stage, be it in climate tech, biotech, or blockchain applications.
Perhaps the most striking aspect of this transition is just how quickly wealth holders have embraced it. The adoption rate of crypto among the affluent serves as a microcosm for the broader alternative market, indicating that even segments historically regarded as too volatile are now on the table. “Ten years ago, alternative investing might have felt like a sideline. Today, it’s arguably the center of gravity for investors who want to move the needle,” says Estevez.
Yet no one disputes that these roads come with potholes. Regulatory frameworks for digital assets and infrastructure investments are in flux globally, and private transactions lack the transparency of public market deals. Wealth managers generally recommend balancing the allure of these higher-risk, higher-potential-return plays with more traditional holdings. It’s a stance that aligns with J.P. Morgan’s view that alternatives shouldn’t be a replacement for core strategies, but rather a supplement to them—an engine for growth and diversification when properly understood and managed.
In the end, alternative investing may be edging toward a tipping point, blending the old guard of real estate and private equity with the bold promise of crypto and direct deals. The debate will undoubtedly continue over whether this approach mitigates risk or simply repackages it. For now, data from J.P. Morgan and Grayscale suggests that at least one demographic—ultra-wealthy and high-net-worth investors—believes the potential rewards are worth the ride.
