Are Investors Crazy for Crypto?

6/1/2022

Cryptocurrencies have been gaining popularity for over a decade, with the current size of the cryptocurrency market being over 1.5 billion dollars. This investment option has been most closely followed by younger investors, who are often the first to adapt to new technology, products, or investment options. Despite how large the cryptocurrency industry is, are wealthy individuals investing in crypto, or are they even familiar with this investment option?

The concept of cryptocurrency started in the late 1980s and early 1990s, with the idea of a currency that did not require centralized regulation (banking) and could be sent without a trace. The actual cryptocurrency market didn’t come about for nearly 20 more years, with 2010 being when Bitcoin, the first tradeable cryptocurrency, was valued. Cryptocurrency would not exist in its current form without blockchain technology, and blockchain technology is a method of recording or documenting transactions that is sent and duplicated across computer systems that are on the blockchain; allowing these transactions to take place without government or third party involvement. This provides for the ability to communicate and distribute trading information without the ability to edit the information.

Investors do not need to be experts in blockchain to have knowledge of and exposure to cryptocurrencies. According to recent research from Spectrem Group, half of investors consider themselves to be familiar with cryptocurrencies. That familiarity increases to over 70 percent among Millennials, and nearly two-thirds of investors with a net worth between $10-$25 million. This familiarity correlates with an increased likelihood of having cryptocurrency investments now and in the future.

Only 12 percent of investors are currently invested in cryptocurrencies, yet 38 percent of Millennials are invested in cryptocurrencies. Nineteen percent of investors in Information Technology are invested in crypto, while 22 percent of investors with a net worth between $10-$25 million are invested in cryptocurrency. Those three investor segments are also the most likely to invest in cryptocurrency in the future, with 46 percent of Millennials being the most likely to invest in this option in the future.

Men and women differ on their interest in cryptocurrency investments slightly, with men more likely than women to be familiar with the investment, and more likely to invest in cryptocurrency now and in the future. Cryptocurrency will continue to attract the interest of investors, as the extreme price changes of that investing segment attracts many investors wanting to significantly increase wealth through trading of such a volatile investment. As more investors become educated regarding cryptocurrencies and exposed to this investment option, there may be increased interest. Investors wanting to learn more about cryptocurrencies should reach out to a financial professional for further education and to discuss investment options, as not every cryptocurrency type is available for purchase with every financial institution.