According to a recent study of wealthy Americans by the Bank of America, younger investors are choosing to allocate significantly more of their portfolios to crypto, and are more likely to believe that crypto offers the greatest opportunities for growth.
In the over-42 age bracket, 41% of respondents chose domestic equities as having the best opportunities for growth, and only 7% chose cryptocurrencies and digital assets. In the 21-42 age bracket, only 12% chose domestic equities, while 29% chose cryptocurrencies and digital assets.
In terms of allocation, the older age group hold on average just 2% of their portfolios in crypto, while the younger group allocates an average of 15%. These generational differences were also clearly reflected in questions about the understanding of cryptocurrencies and the belief that cryptocurrencies will become mainstream in the next three to five years.
This should come as no surprise to anyone who has been following crypto development, and at the same time, the results should act as a wake-up call to anyone who remains dismissive of blockchain-based financial technology.
Why Might Younger Generations Choose Crypto?
The most obvious answer is the possibility of outsized returns, and the probability of, at minimum, continued growth. This is a potent combination resulting from the birth of an entirely new industry connected with fundamental social necessities: money and transactions.
Viewed from this perspective, crypto, if assessed carefully, can start to appear as the less risky option, in the sense that it is in a recognizably expansive phase.
However, that said, even if one viewed crypto as precarious, younger investors are simply less likely to be risk-averse. Resultantly, this actually causes crypto to become less risky. Essentially, the more people that back and adopt a new development, the more stable that development becomes, thereby attracting new investors, becoming still more stable, and so on.
Then there is the question of crypto understanding. Generations are coming of age who are, if not yet quite crypto-native, then certainly moving in that direction. The ideas of setting up multiple crypto wallets, switching between tokens and networks, trading NFTs, or experimenting with DeFi, are, to a growing number of users, neither…
