Trending
To clarify, that headline doesn’t imply that investors are outright forsaking stocks in favor of bitcoin, but a new survey confirms many market participants have sold traditional assets such as equities and gold and used the proceeds to purchase the largest digital currency.
A survey of more than 1,400 American investors by Chainplay indicates 52% sold gold or stocks to buy bitcoin, confirming that the cryptocurrency is increasingly going mainstream. That’s a trend for advisors to be aware, but there’s more. As more retail investors and clients, embrace bitcoin, many become “crypto curious” and get seduced by tales of big, rapid gains in the more speculative corners of the cryptocurrency realm.
In other words, advisors should be inquisitive about what their clients are doing with crypto outside of the advisor/client relationship because the Chainplay survey indicates some clients could be biting off more than they can chew with digital currencies. Consider the following. Fifty-one percent of those polled by the research firm said they allocate 30% of their crypto portfolios to memecoins – the most speculative form of digital currency.
In less alarming news , though news still worthy of advisors’ attention, 20% of those surveyed said they devote at least 30% of their portfolios to crypto. That’s arguably too high, even for the youngest, most risk-tolerant investors.
Crypto Demographic Shifts Matter, Too
Cryptocurrency has long been viewed as a young person’s asset class simply because the young have the benefit of time and can ride out volatility. However, the big gains associated with bitcoin and other digital currencies have lured investors across all age demographics and that’s something else advisors need to be aware because there are some surprises on this front.
“Gen Z leads the charge, starting to buy crypto at an average age of 22. Millennials follow closely behind, entering the market at the average age of 29. Meanwhile, Baby Boomers tend to start investing at the age of 50,” according to Chainplay. “This shift illustrates how younger generations are increasingly comfortable with digital assets, while older generations are adopting crypto at a more gradual pace.”
There’s not a wrong age to be engaged with cryptocurrency per se, but if an advisor that encounters a 65-year-old client with 30% of discretionary portfolio in bitcoin likely needs to initiate a conversation about portion size.
Getting the crypto allocation size right and age appropriate is pivotal at a time when, as noted by Chainplay, 77% of Americans expect to buy more crypto this year and 60% see themselves doubling their exposure to the asset class.
Cyrpto Mainstream Rise Continues
Led by bitcoin and some of the other more credible digital currencies, crypto is mainstream and that’s only going to increase. There’s no point in fighting it, but advisors still play vital roles in steering clients clear of danger. That’s not going to change, either.
“The results of our survey show that cryptocurrency is becoming a mainstream asset for many Americans,” concludes Chainplay. “The younger generation is leading the way, but older generations are also taking steps to include crypto in their investment strategies. With an optimistic outlook for the market in 2025, crypto ownership in the U.S. is set to continue growing.”