A whopping $84 trillion in private wealth will pass from baby boomers to Gen X and millennials by 2045. Yet generational differences in people's view of money have never been starker.
Established recipes for wealth creation guided investors through markets thick and thin over decades after World War II. The widely accepted investing rule of 60% in equity and 40% in fixed income led baby boomers to build solid nest eggs. Compared to this legacy and time-tested investment style, cryptocurrencies have the appearance of an arcade token to cash in on arbitrary wins.
The younger generation sees things differently, according to a recent Bank of America study of young, wealthy investors.
Seventy-five percent of investors between the age of 21 and 42 are looking beyond stocks and bonds, according to the Bank of America study. It found that 47% already own cryptocurrencies. Younger investors are also 7.5 times more likely to own crypto.
Younger Investors Embrace Crypto More Than Their Parents
On average, they allotted 15% of investments to cryptocurrencies and 25% to stocks. In contrast, their parents preferred 55% in stock and 2% in digital assets. Younger investors also do not appear to mind the notorious volatility associated with the class. That means they will likely ride out the volatility than ditch cryptos altogether.
The study comes on the heels of an earlier note from Bankrate that showed crypto interest drop after nearly $2 trillion got wiped out this year in digital assets. Only 21% of investors showed a level of comfort with the volatile asset in the September survey.
Gen Z — those born between 1997 and 2012, right in the middle of the digital age — came out with 34% saying they were very comfortable with crypto. Baby boomers lagged with 11% embracing crypto, while Gen X (people born between 1965 and 1980) and millennials (born between 1980 and 1996) fell somewhere in between.
Crypto interest seems to be renewing even as the crypto winter extends. Even older banks are opening services for cryptocurrencies. The Bank of New York Mellon announced this month that it will hold customers' Bitcoin and Ethereum in their accounts.
U.S. Jumps In Cryptocurrencies Adoption Rankings
A broader survey also shows the U.S. has moved up the ranks in crypto use. The global ranking rose for volume of total cryptocurrency trades as well as for retail cryptocurrencies traded on centralized services. The number of total and retail decentralized finance (DeFi) users has also moved up the U.S. in ranking. Overall, users have been more active than the pre-pandemic levels.
Earlier analysis also showed that long-term Bitcoin and Ethereum holders were holding their coins for the long haul and in wallets older than two weeks, or on exchanges for related services. Volume for coins in service has spiked for Ethereum as expected since staked ETHs have ballooned after the Merge.
Holding coins through the bear plunge reflected in the increases in wallet age. The distribution of Bitcoin and Ethereum across wallets also did not change much from mid-2021 to mid-2022.
Crypto Market A Red Herring?
The bear market crash has discounted Bitcoin, Ethereum and other coins by 50% or more. However, cryptocurrencies growth is likely happening in user growth and in signs of consolidation elsewhere, in wallets and distributions across wallets that have remained stable.
