The generational tide is turning – in favor of cryptocurrency and away from traditional mainstream investments. And this makes sense intuitively as well as logically. Younger generations are always going to move in the direction of newer ideas and concepts, so the financial arena should be no different.
Every few months or so suveys are conducted online among investors to guage the public sentiment around a particular subject. And sentiment – even more than fundamentals and technical analysis – is what often drives prices up or down, particularly in the cyrptocurrency sector. We all know how FUD and FOMO run rampant through the internet and spur traders to make trades impulsively. Ideas can go viral in moments nowadays, compared to previous generations. Things move a lot faster in the digital era and we are much more informed too, so occasional surveys are a worthwhile way to acquire statistics regarding the mood of the market and the mind of the masses.
Recently an online survey went out to 1000 investors, including crypto traders, and was answered by a broad geographical spectrum of Americans aged 20-65. They were asked about their preferences regarding investment and the results tell us a lot about the direction of today’s traders. Admittedly this is a specific group of educated, business savvy people who are already involved in the financial sector, so the stats can’t be taken as the mind of the masses as a whole. They do however, show us what investors are thinking and compare trends between young and old, which is in itself, highly revealing.
It was the financial company eToro who hired Provoke Insights, a market research and strategy firm who specialise in brand growth, to conduct the survey whose results were published this month. Granted that there is always a possible margin of error of around 3%, still the figures clearly show that Millennials and GenX investors and traders are trending towards a preference for crypto assets and exchanges as opposed to the traditional stock markets of their parents or previous generations.
This is understandable after the fiasco of the 2008 financial recession – the worst financial crash since the Great Depression of 1929. Not only did huge banks like Lehmann Brothers go bust, but many were simply bailed out by governments using tax payer’s money.
In other words incompetence was rewarded while the man in the street at the bottom of the pile took the biggest knock.
As a result two thirds of Millennial crypto traders say they have more faith in crypto than the traditional financial institutions today. With the growth of blockchain technology this trend will certainly increase in coming years. Even Millennials who don’t trade crypto showed that a third of them now trust crypto over the stock market. And trust is the key here. The blockchain was designed particulary because of the lack of trust in the mainstream banking sector and their systems of operation. It was around the very same time as the Financial Crash of 2008/9 that Satoshi Nakamoto released Bitcoin as an alternative to begin with.
These historic events are intrinsicly tied together. Blockchain is the “trustless”, open ledger, peer-to-peer system meant to replace the very same bad actors that crashed the markets in 2008.
Other stats in the survey revealed that half of online investors would actually be interested in allocating a portion of their 401k retirement plans to cryptocurrency, particularly if it was offered by a traditional fund management institution. Here we see the two financial sectors overlapping in what one could call a dovetail. And it looks like the traditional financial institutions are gradually moving in the direction of adding crypto assets to their portfolios for their clients. Some regulation still needs to be clarified by the SEC of course, and financial advisors need to become more educated in cryptocurrencies.
At that point we will see the merging of the old and the new, and this transition phase will onboard loads more people into crypto, resulting in the long-awaited mass adoption that will drive Bitcoin to its true price of $100 000 and beyond.
There are only 21 million Bitcoin remember, and many more investors are going to want their piece of the action, their bit of coin, so naturally price with head to the moon pretty soon as the old and new financial sectors integrate.
Once the traditional financial sector introduces crypto assets to their customers, we will see 71% of Millennial investors, who currently do not trade crypto at all, begin to enter the crypto market with much more confidence, according to this same suvery.
“Immutability is native to blockchain and that makes real-time audit to be sensible and cost-effective and that is why millennials and Gen X perceive crypto exchanges as less likely to be subject to manipulation and less likely to be a place where bad actors get rewarded with taxpayer money,”
Guy Hirsch, Managing Director of eToro U.S.
We will have to see how Millenials react to the mainstream institutionalisation of cyrptocurrency. If we can’t trust them with our fiat, why should we trust them with our crypto? Especially if they are the ones holding our crypto. Many of these big financial companies, like banks and investment agencies actually keep your assets in their “vaults” for you. Well, as you know by now, if it’s not your keys it’s not your crypto. Unless you personally hold the crypto on your private digital wallet, it is still under the control of the other entity, whether it’s an exchange or an investment firm.
So this may be a constantly evolving space for the foreseeable future, as the old order fades away and the new digital economy falls into place. We are still only at the beginning of one of the greatest economic revolutions in history, so there could well be room for a lot more excitement coming our way.