Who Cares About Crypto?

7/1/2021

Are cryptocurrencies the wave of the future?  The nearly $2.5 trillion in total market value as of April of 2021 would indicate that there is significant interest.  April was the time frame that Bitcoin hit a record high over $64,000.  For many investors, this is an investment sector that they are not familiar with, and subsequently are not investing in.  Spectrem Group sought to understand what type of wealthy investor is knowledgeable about cryptocurrency, and who is interested in investing in cryptocurrency.

Prior to digging into wealthy investor’s knowledge of cryptocurrency, it is important to have a basic working knowledge of what this industry segment really is.  Cryptocurrency is a digital version of currency.  It is a form of payment that can be used online to pay for goods and services.  Cryptocurrencies use blockchain, which is a means to manage and record transactions.  They are not regulated by a government or central bank, which means that cryptocurrency should be free from government influence or manipulation.  The beginnings of this investment choice started in 2009 with Bitcoin and has since seen many other digital currencies be created and join the sector.

When Spectrem Group asked about wealthy investor’s level of understanding of cryptocurrencies, over a third of investors (37 percent) admitted they have no understanding of cryptocurrencies.  Thirty-nine percent feel they have little understanding of this investment choice.  Only two percent have a great understanding of cryptocurrency, and 22 percent have some understanding.  Understanding varies significantly by age and wealth, however.  Millennials and Gen X investors are slightly more likely to have a great understanding of cryptocurrencies, with eight percent and nine percent indicating that level of understanding, respectively.  Nearly half (49 percent) of Millennials feel they have at least some understanding of cryptocurrencies, and nearly a third (31 percent) of Gen X investors feel this way.  Lower levels of wealth are more likely to indicate they have no understanding of cryptocurrencies.

Higher levels of understanding lead to higher levels of interest in investing in cryptocurrencies.  Over two-thirds of investors (68 percent) are not at all interested in investing in cryptocurrencies, however this is driven primarily by Baby Boomers and WWII investors, with 74 percent of Baby Boomers and 82 percent of WWII investors being not at all interested in cryptocurrency investments.  Six percent of Gen X investors are very interested, and 38 percent of Millennials are interested in investing in cryptocurrencies.  Investors at higher levels of wealth are slightly more interested than investors at lower levels of wealth.

Investors need to educate themselves about cryptocurrencies before contemplating any investments.  The most commonly utilized source of investment information is a financial advisor, according to Spectrem Group’s research.  Second to that is network news, which has reported on cryptocurrencies several times recently due to the extremely volatile nature of this investment category.  Utilizing quality sources for investment information, and discussing any potential investments with a financial advisor is recommended before any investment, but especially one that is as new to the financial markets as cryptocurrency.