Which Investors Will Be Impacted By A Cryptocurrency Crash?
Cryptocurrency has been challenged in the past few months with Bitcoin, one of the most popular cryptocurrencies, struggling to stay above $20,000. https://www.financialexpress.com/digital-currency/crypto-crash-latest-news-update-july-6-cryptocurrency-market-price-trends/2584615/ In the past year, 7 pro athletes decided to take their salaries in cryptocurrency. https://markets.businessinsider.com/news/currencies/professional-athletes-bitcoin-crypto-salary-risks-btc-odell-beckham-2022-1 Will only the rich and famous be impacted by the cryptocurrency crisis? How does it impact other investors?
According to research by Spectrem Group with households with $100,000 to $25 million of net worth (not including the value of their primary residence), only 12% of all investors currently own cryptocurrencies. Familiarity with cryptocurrencies, however, is relatively high with 49% of investors indicating they are somewhat or very familiar with cryptocurrencies. Despite the increasing familiarity with this asset/currency, only 15% plan to invest in cryptocurrencies in the next six months.
So, who does own crypto? The chart below highlights current ownership, familiarity and likelihood to invest sorted by age, net worth, gender and occupation. As you can see, younger investors are the most likely to own crypto, along with the wealthiest investors. Males are more likely than women to invest in cryptocurrencies and those in the Information Technology business are more likely than other occupations to own crypto.
While investors do not always consult with their financial advisors regarding their cryptocurrency ownership, this might be a good time for financial advisors to determine if investors are considering reassessing their asset allocation or choosing to hold on to their crypto for the long term. Advisors need to educate themselves about cryptocurrencies in order to effectively advise investors regarding this investment.