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Perhaps it’s the result of the much discussed volatility or the asset class’s roots in technology, but either way, cryptocurrency has long been the territory of younger investors.
Yes, the spot bitcoin exchange traded funds that debuted in the U.S. in January are expanding the field of bitcoin investors and there is some interest in cryptocurrency among older market participants, but at least for now, the most dedicated crypto investors and the bulk of the HODLrs (holding on for dear life) are young people.
Arguably, that’s probably how it should be. After all, bitcoin or any other digital currency are not cash or municipal bonds or any other instrument deemed “safe” for a baby boomer or a retiree. On the other hand, crypto could be further validated as an asset class and credible portfolio inclusion if it’s able to pierce demographic barriers.
Over time, that could happen. As today’s younger investors, who are broadly comfortable with crypto, age, some may remain engage with the asset class. However, when it comes to getting today’s older investors involved, there’s a long road ahead.
The Unsurprising Crypto Lovers
This probably won’t surprise advisors, but the most likely crypto investors are men, particularly those that are millennials or Gen Z. The Motley Fool Ascent's 2024 Cryptocurrency Investor Trends Survey shows that 55% of men polled are very or somewhat likely to buy crypto in the next 12 months compared to just 31% of women that said the same.
When it comes to reasons why some market participants aren’t getting in the crypto game, it’s clear age plays a part and that’s born out in concerns about regulations and confusion over technology.
“The most-cited reasons why respondents who don't own cryptocurrency haven't invested are security concerns (36%), not knowing what to do with it (35%), and not understanding how to buy crypto (33%),” according to the survey. “Twenty-four percent of non-investors won't buy crypto because they think it's a scam and 28% haven't invested due to the lack of a clear regulatory framework for crypto. Those concerns are likely fueled by crypto's scandal-filled 2023.”
ETFs should allay some of those concerns, particularly when regulatory framework and technology, but data from the Motley Fool survey indicate women, Gen X, and boomers said they’re not flocking to bitcoin ETFs.
Some View Crypto as a Retirement Asset
Although the percentage is down from 52% last year, 44% of those queried told Motley Fool they’d consider including digital assets in a retirement portfolio. Again, that outlook falls along demographic lines.
“The respondents most interested in adding crypto to their 401(k)s and IRAs are current and previous crypto investors, with millennials, Gen Z, and men most willing to consider. Non-owners, women, and older generations are least likely to be interested in putting crypto in their retirement funds,” according to the study.
Still, there’s opportunity for advisors. For women and Gen X clients, they may be missing out on a portfolio enhancer with even just a bit of crypto. For younger clients, they could very well need guidance regarding proper allocation to crypto, particularly in retirement portfolios.