- Research shows that millennials are driving this year's ongoing crypto-mania.
- Millennials see crypto as a long-term investment opportunity that requires little effort.
- They see crypto as a way to break away from traditional structures and investment approaches.
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Cryptocurrencies are all the rage right now, thanks to the likes of Tesla boss Elon Musk hyping up dogecoin, or some of the world's most respected financial institutions making bitcoin available to their clients, right down to youngsters on social media snapping up digital coins for pennies and then paying for college.
The value of most digital tokens has gone through the roof. Search volumes for "crypto" on Google outpace those for "stocks" by a ratio of 5 to 1 right now. Everyone wants in and to "HODL" – slang in the crypto community for "hold on for dear life", or hang on to your bitcoin, no matter how crazy the price goes.
And at the very forefront of the charge into crypto are millennial investors. In the US alone, two out of three millennials say they believe it's becoming a more attractive asset class. And why not? To many, it looks like quick, easy money and it's the polar opposite of their parents' definition of "finance."
More time to secure returns, low-effort investing, the novelty value, detaching from traditional financial systems and the temptation of high rewards are some of the reasons some of the young investors we spoke to gave as to why they love cryptocurrencies.
The data certainly supports this.
Crypto exchange Gemini published a survey earlier this week showing almost 20 million Americans were planning to invest in crypto over the next year.
Mastercard's New Payment Index showed earlier this month 40% of those surveyed said they would use crypto in the next 12 months. Specifically though, 67% of millennials said crypto had become a more attractive investment option since its boom began, and 75% of this age group said they wanted to learn more about the asset class.
Millennials are largely understood to be people born between 1980 and 1994, many of whom are gradually inheriting their baby-boomer parents' wealth and pretty much all of whom have grown up in the digital age.
In the UK, more than half of all young investors are actively trading cryptocurrencies, and another 20% believe it is a solid investment choice, a Charles Schwab survey shared exclusively with Insider in April showed.
"After many half-drunk conversations with [a friend], we finally saw "the light" that was DeFi… The idea of being an early adopter, even with all the hype, was a little scary but also very exciting." Jon Amar, CEO of public relations technology startup Vetted, told Insider in an interview.
But it was not just the novelty that attracted Amar into the crypto-sphere. "I can't go to a store and buy a good or service with gold. I can, however, do that in certain places with crypto. This was a big determining factor for me, as it legitimized crypto as a viable alternative asset." he said.
Melissa Lewis, a young investor who uses Binance to trade cryptocurrencies told Insider one of the reasons she likes crypto investing is its ease. "With crypto, you can buy it and forget about it for a couple days and then when I check it, it's increased," Lewis told Insider.
"Crypto has had a steady and stable increase, whereas my stocks are constantly going up and down," she continued.
Others echoed this sentiment: "I also see a more visible path to making profits in this market versus the equity and bond market," investor Mitchell Yousem said.
This long-term nature of crypto investments is one of the main reasons why millennials are the driving force behind the boom, rather than older investors, eToro crypto market analyst Simon Peters told Insider.
"With millennial investors compared to the older generation, time is on our side and we can afford to hold these investments for 20, 30, 40 years in certain cases and see what happens, where older generations don't have the luxury of time," he said.
But Peters also believes many are first tempted by the thrill that crypto's volatility brings.
And these tokens are certainly volatile. The most widely traded, bitcoin, has risen by 78% so far this year alone, having hit record highs around $64,000 just one month ago. But this pales in comparison with the price action in some of the alternative tokens. Meme crypto dogecoin has gained 12,000% this year, while Cardano's ADA token has risen almost 1,000%. But even that seems small fry compared with tiny, hyper-volatile tokens that can gain 1,000% in 24 hours.
"Whilst people may have gotten in initially purely because of the volatility and the price action, once they've actually gone and actually understood the technology, what it's about, what crypto's trying to do essentially that's when more of an interest may develop as well, eToro's Peters said.
It's not just about convenience and money. Crypto, unlike traditional investment approaches, offers transparency Yousem said.
"I think many of the younger generation have a great deal of skepticism towards banking institutions, and investing in and choosing to use alternative forms of currency is one way to vocalize this view," he said.
Based on Peter's experiences at online broker eToro, he believes this plays a role on top of the money-making potential. "I think with the younger generation as well there's perhaps over time been a bit of a disengagement with governments and central authorities and the whole, I suppose, ethos of crypto is to be decentralized."