Since the inception of cryptocurrency, its markets have been driven largely by millennials, along with younger members of GenX and, more recently, members of Gen Z. However, thanks to the introduction of exchange-traded funds (ETFs), the dominance of those younger generations is eroding.
ETFs are inducing greater participation from baby boomers, the richest demographic in the world. They control an estimated $68 trillion in assets in the United States alone — the most of any single demographic. As investors, they have typically been overexposed to equities and real estate, for which they own the largest slice. The crypto industry is one in which they are underweight.
In the U.S. half of the investment firms managing their wealth have access to the new Bitcoin (BTC) ETFs. The influx of experienced investors will continue bringing new dynamics — including price appreciation, different investment approaches and greater stability.
Related: Rushing OP_CAT on Bitcoin could come at an immense security cost
Bitcoin ETFs have attracted more than $15 billion in investment as of June, reflecting a belief in Bitcoin and, arguably, the larger crypto industry. While this is small relative to holdings of traditional assets, the approval of the ETF has mainstreamed access. And just as some experts are recommending a 1-5% Bitcoin allocation in portfolios, products offered by large asset managers and banks ensure boomers can easily invest on platforms where their wealth is already held, bypassing the need for exchanges that don’t diversify.
Bringing new wealth and scrutiny
Research indicates boomers are here to stay. And why not? Bitcoin has a fixed supply, and it’s been the best-performing asset of the last decade. Cryptocurrencies have become a valuable means to diversification, leading to greater interest and price discovery via both institutional investors acting on behalf of their clients and retail investors allocating directly.
Contrary to popular belief, boomers might be better crypto investors than their younger counterparts. Research from Bybit and Toluna has shown that 34% of boomers spend “a few days” on due diligence before investing, which is 50% more than younger generations.
Related: Ether ETF approvals show staking may still be a security in SEC’s eyes
In North America, 64% of investors spend less than two hours on research before investing. (Meme coins, anyone?) Boomers, particularly those who are retired, have more time for thorough research, making them more knowledgeable and patient investors. Instead, boomers placing greater interest in technical factors of tokenomics, utility, and the competitive landscape will lead to better investment outcomes than younger investors often prioritizing reputational factors.
In a February interview with Bloomberg, Galaxy Digital CEO Mike Novogratz reiterated his long-time prediction that Bitcoin’s market capitalization — around $1.3 trillion as of June — would surpass gold’s roughly $15 trillion, thanks in part to investments from boomers.
“This is probably the first time in the history of Bitcoin that we have a true price discovery,” Novogratz said. “For every Charlie Munger – God rest his soul – who passed away, that money is finding its way to Gen Z and millennials, and they feel much more comfortable with digital gold than old, clunky gold.”
Beyond buying directly, the effect of intergenerational wealth transfer is another factor likely to drive the next market cycle. With trillions of dollars set to be inherited, crypto will rise as the primary beneficiaries of this wealth are digitally literate, even if with different expectations. By 2030, estimates suggest millennials will hold five times more wealth than at the start of the decade.
Boomers are likely to be a game changer for crypto because of the wealth they hold; the fact that they are late to the market; and because they take more time to become informed before investing. Their more rigorous research and investment styles bring much-needed stability to the industry.
After all, it is difficult to see the same investors risking capital on meme coins and instead focusing on stablecoins, that’s a positive step. At an industry level, the development of new altcoin ETFs, the asset managers operating in the space and the size of those firms, and the economic transfer of wealth from boomers will see the demand for crypto grow.
Robert Quartly-Janeiro is chief strategy officer at Bitrue, a cryptocurrency exchange with an Asian and European focus. He has worked for hedge fund advisory Sussex Partners, Santander Investment Bank, Venture studio CCV, the London School of Economics, Black Square International, and the investment consultancy QR&P.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
