Regardless of the year we were born, smart investing has always meant being wise to the next big thing. With that in mind, it’s not a surprise that it’s the more adaptable younger generations who are widely investing in cryptocurrency – after all, who can dismiss the 60% annual rate of return on Bitcoin over 10 years, especially compared to the 10% average?
True, cryptocurrency comes with a novel level of risk due to being a completely new financial asset. Investors who are getting on board with crypto are taking their chances on technological infrastructure unlike anything the world has seen before. That may be why older generations tend to stick to their guns with traditional investments, with 55% of investors over 44 not diversifying, according to a recent study put out by Bank of America Private Bank.
By comparison, just 28% of younger investors have single-asset portfolios. Per the survey, which polled 1,000 individuals with more than $3 million in non-real estate assets, that’s because 72% of investors between 21 and 43 believe “it is no longer possible to achieve above-average investment returns by investing solely in traditional [assets].”
Given that Millennials who grew up in the aughts experienced both the dotcom burst of 2001 and the Great Recession of 2008 within a single decade, it’s easy to see why they’re looking for alternatives outside of traditional assets.
Older investors, meanwhile, draw from a longer breadth of experience, potentially including the dozen bull markets that have happened since 1957. Market rallies have occasionally served older generations well, and many novel technologies have come and gone during their lifetimes, reducing their appeal.
Perhaps the most famous poster child of this is Warren Buffet, whose choices made through Berkshire Hathaway returned a staggering 3,641,613% between 1964 to 2021. Buffet, for his part, has called cryptocurrency “rat poison” and vowed never to personally invest in it, even as Berkshire Hathaway itself is over $1 billion in on it.
Buffet is hardly alone among his older generation peers. As the age of the prospective investor decreases, however, we see more adoption. Buffet, after all, is 93 – if we take a generational step down to famed financial manager Steve Cohen, who managed annual returns of 30% between 1990-2010, we find bullish enthusiasm to the point of starting his own dedicated crypto investment firm.
Financial advisors themselves are steadily coming around the corner on crypto, with 33% preparing to recommend it to their clients within the next six months (compared to just 21% in December 2023). That’s no coincidence, as this year has seen significant gains on the crypto front when it comes to institutional acceptance and the creation of a new financial instrument (crypto spot ETFs). Countries, too, are getting on board, investing into cryptocurrency as a means to offset tumultuous fiat currencies that are prone to runaway inflation.
In reality, it’s been a short 16 years since the option to invest in cryptocurrency has been on the table at all. That’s not a long enough time for some investors to get on board, as evidenced by many examples in the history of the market.
Consider Alexander Winton, who sold the first car in the U.S. in 1897. At the time, his banker was so put off by his investment in the effort that he called on him to say: “Winton, I am disappointed in you.” Fast forward 30 years, and 23 million cars were plying the roads of America.
In other words, with enough time, cryptocurrency will be as ubiquitous as any other asset on the market (if not even more so), particularly as Millennials increasingly invest the $90 trillion of anticipated inheritance they’re set to receive by 2044.
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