Crypto Loses Momentum, Yet Younger Generations Continue To Flock — What’s Keeping Them Invested?
Cryptocurrencies at large are taking a beating. Bitcoin, which recently saw 40% of investors underwater, is down 55% from its all-time high of $69,044 in November 2021, according to CoinGecko. Nonetheless, a new CivicScience survey found that younger investors are still attracted to digital assets.
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The survey showed that while most U.S. adults don’t plan to invest in cryptocurrency, it is growing in popularity, mainly among young investors. It noted that 18% of Americans invest in cryptos, while 12% plan to invest, while a staggering 58% haven’t invested and don’t plan to.
“I don’t think many older adults trust or understand cryptocurrency,” Courtney Godshall, Vice President of Media Insights at CivicScience, told GOBankingRates. “Currently, it is still the older generations that hold most of the country’s assets and are more likely to have them invested in financial products that they understand. Older adults close to retirement are also more risk averse and less likely to make changes to their financial portfolios. As younger generations begin to accrue more wealth and control more assets, I think this will shift.”
Seventy-one percent of crypto investors are under 45 years old, according to the survey. In the first quarter of 2022, among those invested, 21% were in the 18-24 age bracket; 30% were in the 25-34 age bracket and 20% were in the 35-44 age group, according to the data.
Godshall said that she attributes the age of investors to the digital world they have grown up in. “Their technical and social media savvy gives them more confidence in cryptocurrency. Since technology has always been a part of their world, digital-only investments, interactions and transactions are normal for them. Many are also willing to take more risks with their investments, since they have more time to recoup any losses.”
CivicScience also found that among those who invested in cryptos, the gender gap is still salient, as 57% are men. In addition, the study noted that 45% are non white, and 52% said social media influences their purchases.
Bitcoin Foundation Chairman Brock Pierce told GOBankingRates that it is not surprising that those under the age of 45 are more drawn to cryptocurrency, because they are also, generally, more drawn toward adopting new technology. “Older investors are more likely to consider gold as a safe haven asset as inflation increases, and it will take more time for them to come around as cryptocurrency tools and education become more widespread,” he said.
The sentiment was echoed by many experts who underscore the fact that young people have grown up in a digitally native environment and are fluid when it comes to all things internet.
“It makes sense that when it comes to transferring value through digital information systems that might seem complex to adults, millennials and Gen Z are driving the adoption globally of crypto assets,” Michael Rosmer, CEO of DEFIYIELD, told GOBankingRates.” He added that the flurry of young investors still coming into this asset class is a strong indication that crypto is growing — and will continue to grow — even as we enter what appears to be a period of sharp price downturns and slowing growth globally.
In addition, the sophistication of younger generations’ investing in crypto assets has grown exponentially in recent years, and it’s no longer just about buying Bitcoin or Ethereum.
“They’re utilizing the growing decentralized finance, or DeFi, ecosystem to their advantage, particularly when it comes to staking crypto for various forms of yields,” Garry Krugljakow, founder and CEO of GOGO Protocol, told GOBankingRates. “But it’s important to note that the risk profile of young investors is higher, and they are willing to try out new technologies that offer potentially greater rewards. And this is a major catalyst for why crypto will become more secure and useful in the long run. It’s an exciting time, and this trend makes it even more exciting!”
In terms of perceptions, Americans believe that while not yet widespread, crypto is growing in popularity, with many thinking it will be noteworthy in the next few years — a trend that is accelerating, according to CivicScience data.
There are 30% of Americans who think that cryptos will become prevalent, a jump from the 17% in June 2021. In addition, 12% believe they will become common compared to 5% in 2021. Finally, 59% believe they are niche, compared to a whopping 79% in June 2021.
Russell Starr, CEO of DeFi Technologies, explained to GOBankingRates that younger investors, especially millennials and Gen Z, have only ever invested in a post-2008 crash world and became highly distrustful of traditional financial institutions — a major reason why they invest in crypto. “Crypto has offered an outlet for people who want to invest, but in a way that allows them to essentially manage their money as they see fit. Even as markets tank right now, it’s not because crypto isn’t viable,” he said.
“Ultimately, I see the decentralized finance aspect of crypto — and the far higher yields that this form of investing offers relative to traditional investments — as a way to make personal investing and finance far more accessible and fairer in the long term,” Starr continued, adding that the recent downturn in the market is a normal phenomenon in crypto — these dramatic downturns happen all the time and are expected in a young, high-growth industry.
“I think investors who have experienced this type of volatility in the past have a thicker skin and in turn aren’t as flustered by the volatility,” he concluded. “This is a reason why I believe it’s high time that regulators decide to help the average investor by making crypto and DeFi more accessible by offering exchange-traded vehicles so that everyone can reap the benefits of the future of finance and Web3.”
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