Millennial investors ‘falling out of love’ with crypto and newer assets in favour of stability

As crypto-currencies crash by 20%: Younger investors fall out of love with bitcoin and meme stocks as they turn to ‘stable assets’ – like gold…

  • Nearly two-thirds of younger investors have sold at least some exposure
  • Half say their investment was unsuccessful, disappointed or lost money
  • Nearly 70% are considering precious metals like gold for their portfolio
  • Bitcoin plummeted in value on Tuesday after its adoption by El Salvador 

Nearly two-thirds of millennials and Generation Z who have owned cryptocurrencies like bitcoin or so-called ‘meme stocks’ have now sold some or all of them, new research suggests.

A survey by the Royal Mint shows that younger investors may have begun shifting their attention to more traditional assets such as gold, with a growing preference for portfolio stability rather than the wild volatility seen in some newer asset classes.

Millennials and Generation Z are those born between 1980 and 1995, and after 1996, respectively.

The report comes as bitcoin and other digital currencies suffered a severe sell-off. Bitcoin has plunged by nearly 15 per cent from its four-month high as its adoption as legal tender by El Salvador appeared to sow panic on the crypto markets.

Ethereum was also down by 15 per cent, while some of the other crypto-currencies suffered losses of more than 20 per cent.  

Over half of those surveyed by the Royal Mint said their cryptocurrency investment was unsuccessful, did not gain as much as they had hoped or had lost money.

Demonstrators take part in a protest against the Bitcoin Law on 7 September in San Salvador, El Salvador

Demonstrators take part in a protest against the Bitcoin Law on 7 September in San Salvador, El Salvador

Analysts have attributed bitcoin’s heaviest day of losses in nearly three months, which saw it fall from $52,956 to as low as $46,560, to investors who had bought the cryptocurrency in response to rumours of El Salvador’s adoption now cashing in.

The popularity of cryptoassets has boomed in recent years, encouraged by their adoption by businesses like Tesla and PayPal, and mainstream financial services companies getting involved.

This has led to red flags raised by regulators such as the UK’s Financial Conduct Authority, which earlier this week warned that cryptoassets are largely unregulated and if people invest in these types of products, they should be prepared to lose all their money.

Meme stocks include US-based consumer electronics retailer GME, which captured headlines globally earlier this year as an army of retail investors rushed to buy its shares. 

The Royal Mint’s survey found that 32 per cent of more than 1,100 young investors said they were drawn to the high-risk, high-reward nature of cryptocurrencies and meme stocks.

But more than half (53 per cent) of younger investors surveyed felt their investment was unsuccessful, did not gain as much as they had hoped or had lost money.

In response, 68 per cent of young investors are considering investing in precious metals following their experience with cryptocurrencies and meme stocks.

Figures from the Royal Mint show 21 per cent of new gold-buying customers over the past 12 months were aged under 35.

Top motivations to back precious metals included their history of consistent growth (24 per cent) and reputation for holding their value over time (37 per cent).

Iona Bain, founder of the Young Money blog said: ‘This research from the Royal Mint suggests that young investors are falling out of love with new and volatile assets, instead turning to more tried-and-tested investments to bring some equilibrium and stability to their portfolios.’

Andrew Dickey, director of precious metals at the Royal Mint, added: ‘The rise of meme stocks in the late half of 2020 and early 2021 has really opened up the idea of investing to a new, younger group of people.

‘It’s great to see a new financially savvy generation is emerging, realising the benefit of a diverse portfolio.’

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