A Survey finds the younger generation is more open to crypto-investments: One reason is the lack of alternatives.
Up until 2017, cryptocurrencies were more of a nerd-niche phenomenon than an actual investment product. That changed during the second half of 2017 when Bitcoin soared and reached its all-time high in December 2017, hitting almost $20,000. The crash came promptly, followed by long crypto-winter, where prices traded sideways. At that time, the asset class was dismissed as a fad, a scam, without any economic value.
Flash forward two years, the market has changed significantly. Bitcoin is up 200% from its 2018-low and has broken through the $10,000-mark. Much more important than the actual price, though, is how the perception of crypto assets has changed.
Bitcoin has now been around for about 11 years and is in a good place. The asset has seen its fair share of ups and downs over the years, but it has survived – more than that, it has generated more than 9,000,000% Return on Investment since its inception. Investors have had more than enough time to observe the emergence of the new asset class, and they are getting more confident in its long-term growth prospects.
Poll says: 13% of young Swiss consider crypto-investments
13% of Young Swiss think cryptos will become more important in the future, according to a survey by Zurich-based Migros Bank, which analyzed the savings behavior of various age groups. The data shows that it’s not at all unusual anymore for people to store value in cryptocurrency investments.
7% of the respondents in two age groups, 18 to 29 and 30 to 55 years old, own crypto-assets. Of the younger age group, 13% said they plan to invest in crypto in the future, compared to 7% in the second group. Older investors are more pessimistic: Of those aged over 55 years, only 0.5% expect cryptocurrencies to appreciate and grow significantly in the long run. But even in that age group, one in every 100 currently owns a digital asset.
Savings don’t cover inflation anymore
The Swiss are savers: 90% of the population saves money regularly, with most of them putting aside up to 1,000 francs a month. Investing, however, is not that popular: The majority of 18 to 29-years-olds keep money in their savings accounts even for long-term purposes. A third of the respondents even keep more than 70% of their funds in this type of account.
Their problem: In today’s market environment, interest rates on savings accounts are so low that they don’t even cover inflation. Savers lose money.
The young provide two reasons for not switching to financial market investments: Firstly, they are not familiar with them (52%), and secondly, the amount of wealth they can set aside is too limited (48%).
Crypto-investments, however, are neither capital-intense nor particularly complex. That’s why younger people are considering crypto-investments as a viable option. Besides, they do understand the technology and many believe the current monetary system will have to change within their lifetime. Crypto might provide an alternative.
On top of that, Bitcoin has had had a superior risk-adjusted return compared to other asset classes over the last five years. Investors are taking a higher risk, but they are compensated with a significantly higher return. Younger investors are more willing to accept this risk, which makes cryptos comparatively more attractive.