We are seeing many Gen Z and young millennial investors and these include teens to those in their early 20s going the cryptocurrency way as opposed to traditional investments. This next generation is super online and quite into the technology that surrounds the cryptocurrency market. Some of the most common crypto products include blockchains such as Bitcoin and Ethereum, NFTs, meme coins such as dogecoin, nonfungible tokens, decentralized finance, and DeFi.
It has been observed that this bracket of investors are spending a bulk of their savings on these digital investments. According to CNBC Millionaire Survey, it is estimated that about half of millennial millionaires have invested at least 25% of their wealth into cryptocurrencies. A third of the same millennial millionaires have half of their wealth invested in crypto while the other half are NFT owners.
The young investors also participate in meme stock rallies that take place when retail investors purchase stocks shorted by Wall Street hedge funds such as AMC Entertainment and GameStop. The investors hopefully intending to force hedge funds to pay and thereby overcoming what they deem as an inefficient system.
The main reason young people are turning towards alternative investments such as crypto is the lack of trust in traditional investment institutions. They perform their own research as opposed to trusting the insights provided by traditional institutions such as from financial advisors in legal firms.
Another factor driving the younger generation towards cryptocurrency investments or meme stocks is their genuine positive outlook into blockchain technology. This goes in tandem with their feel of disconnection from traditional investment institutions. The crypto space has been defined as a place they find a community in and some see it as a fun space. As seen, the goal is the development of an industry that they can connect with through the exchange of stocks, digital assets, or coins.
A common view from different Gen Z and young millennial investors is that these two factors, trust ad connection, highly impact their choice of investment and their future outlook. Despite these young investors trading in various platforms such as the Bitcoin Circuit with the aim of gaining fast profits through buying and selling, most of them intend to hold on to their favourite cryptocurrencies as long-term investments.
Many of these young investors seeking long term investments in the crypto industry intend on never selling as they believe it’s the future of finance. It is for this reason that some believe in the long-term applicability and use of crypto.
This holds true for many young investors, who trust in the technology itself. Many of these investors are intrigued by how bitcoin has been used for community outreach in different parts of the world. For example, in Venezuela, crypto was one way of receiving money from relatives in the U.S. at a time when humanitarian aid was prohibited.
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Even in cases where the high price may make owning bitcoin seem far-fetched, they point out the option of purchasing fractional shares referred to as satoshis. Some young investors expressed admiration for how Bitcoin provides financial accessibility and equality to everyone including people who are unbanked. The indication is that Bitcoin is one step ahead in enabling people that cannot access traditional methods to achieve such phenomenon.
Initially, it was observed that many Gen Z and young millennial investors went for cryptocurrency to avoid traditional financial institutions while still building wealth. They depended on their own research and invest without seeking the help of financial advisors. An indication that part of their distrust comes from observing inequitable and inefficient financial systems. As such, the younger generation has great concern about their wealth, retirement and want to effect change.