The rich are going crypto with a survey of 1052 millennials that have $3 million or more excluding their residence, finding that crypto is their top asset.
“29% of younger people said crypto presents a leading opportunity to create wealth, only 7% of the older group agreed,” the Bank of America Private Bank said in its report.
The survey also found that stocks are no longer quite hot, with the most educated generation in history instead going to alternative investments.
“Conventional investment advice suggests that younger investors hold more stocks, not fewer, than older investors,” the bank complains. “Yet the 21 to 42 age group holds just a quarter of their portfolio in stocks, compared with 55% of investors aged 43 and older.”
The difference is because 75% of young people say “it’s no longer possible to achieve above-average returns” on traditional stocks and bonds alone. Only a third of the older group holds the same view.
The stark generational difference on crypto may be partially due to the fact the older group is very uninformed.
64% of the young said they understand crypto very well, only 12% of the older group said the same.
Coincidentally, 11% of the old group agrees “crypto can be an effective long-term investment vehicle.” 32% of the young group says the same.
Another generational difference is in regards to private equity and direct company investments. The young are more likely to consider them than those 43 and older.
The survey does not analyze the reasons for the differences in these views, but it may be due to a number of factors.
First, the internet has informed all that you can actually invest in private equity and for some young people that may have actually been their first investment, rather than stocks.
There was the whole crowdfunding wave in 2010s, when most of these millennials would have been at university, until the Securities and Exchanges Commission (SEC) shut it all down.
There was the ICO wave in 2017, with two notable successes from that being Binance and Crypto.com. Either would have turned $1,000 and even $100 into a million if the investment was held over the past five years.
There’s the airdrop model now and NFTs, all of which raises awareness both that you can fund startups – it’s not something for ivory towers in Silicon Valley – and that it can actually be easy and convenient to do so as long as you ignore all the SEC barking.
Another reason might be, and this is more speculation, that we might be seeing a generational trend in a move against monopolies.
There’s a perception that stocks are more companies which are already global, dominant, and have grown significantly.
That’s in part due to the inability of SEC to keep up with digitization and the fingertips convenience that this generation has tasted through the internet.
SEC instead insists that the old way is how things should keep being done, and the new generation is basically revolting against it.
Stocks therefore are no longer hot, or cool. What is cool now is, interestingly, art. 66% of the new generation holds an art collection, compared to just 23% of those 43 and older.
This finding also speaks to a revolt of sorts, not necessarily against Hollywood, but more towards a desire to basically bring the pen back to the public square.
In concrete terms that translates to young people wanting more events. More synthetically, this can be described as this generation wanting a replacement for religion.
For all its faults, religion played a crucial role of gathering people together. The church was a townsquare of sorts, and the pub is not enough to fill that role which has now largely vanished.
Art is a potentially sufficient replacement in the wider sense of the word to include concerts and events.
This gives this survey a wider theme than just the numbers. The new generation, partially due to being a lot more informed, is more activist in as far as they see their investments as a tool to build a world that they want, rather than being satisfied with a stock index where the investor is a lot more passive.
The Upper Class, Leading the Crypto Movement?
The rich began paying attention to crypto in probably 2018 after numerous academic studies led to some sort of consensus that crypto is good for your portfolio.
That in turn led to the infrastructure for wealthy investors and institutional investors starting to be built up, especially in 2020 and thereafter.
Some interesting divisions however appear to have arisen in our current time. There’s the laggards, arguably, who are still stuck in 2013 arguments and that includes the vast majority, probably about 70%.
But a far more interesting and new ‘division’ is between the common coder or techie and the common finance worker.
They used to be united in dismissing crypto, but the finance guys are starting to become crypto boys.
This transformation is very new, at least in our awareness, and it is probably due to these finance guys having to understand crypto and even use it as part of their job in advising, trading, and whatever else they do.
Crypto for them, therefore, is no longer a subject of talk, but a tool. In addition, they’ve had the benefit of these objective academic studies, and nowadays there’s far too many of them when we used to be excited to get even a one new one.
So crypto in finance is no longer quite a matter of opinion because metaphorically speaking, the pen basically ordered them to look at crypto with clear eyes, they did look, and now there’s anecdotal evidence of what we’ve suggested, that crypto is being integrated in the trading houses of New York and other financial centers.
The finance guys were always part of the crypto movement, however, but until maybe 2016, it was visibly led by coders.
Just why coders, generally speaking, lagged so much is not too easy to say except they dismissed it due to it being ‘easy’ to hack, but it might also be because crypto is in many ways a lot more finance than code.
Because crypto is basically a way of doing finance in code, and since finance is a bit esoteric to the general public, one can maybe see why at least online they seem to be stuck in 2013.
However, starting in late 2019, we have seen the birth of self-executing open source code. This has never existed before, and someone working for Amazon or Google would of course say why not use their cloud, instead of this open source and publicly owned ‘cloud.’
Web3 has not yet taken off properly to dig into that why, but in finance a lot of the why is nowadays very easy to see: it basically automates that finance in as far as the code is the bank, fairly literally.
This should be a fairly threatening proposition for anyone in banking, but in 2016 there was a former JP Morgan director that persuaded banks embrace is a better attitude than hostility because there’s nothing else you can do but adapt.
For techies, no one quite expected hostility so no one bothered with them. In fact crypto was seen as led by coders and therefore naturally you’d expect coders to wave its flag, but maybe we have missed a certain transformation in 2010s when coders went from startup go getters to 9-5 cubicle workers. From the cream so to speak to more, not necessarily the masses, but sort of.
In addition, a worker in banking probably does not have the same affinity to their company than someone at Google or Amazon.
For the latter, their company may well be part of their identity, rather than a global mammoth willing to burn anything for self survival.
The tech scene therefore has chosen to either be hostile or to try and co-opt the crypto space, failing in the latter in 2018.
So now, they only bark online seemingly unable to know just how to respond. They understand crypto, at least some decision makers, presumably, because they probably have seen some stats, but they can’t co-opt it and they probably don’t know how to adapt.
Google Cloud is now trying somewhat by accepting crypto payments, but this division may be more due to time in as far as those in finance had a lot more pressure to understand crypto and how to adapt than those in tech, and therefore the latter are lagging.
It is not quite the case that the upper class is leading the crypto movement, therefore. It is instead more the case that information has reached them a lot quicker with crypto now starting to become normalized as a portfolio asset in finance.
That is, the wealthy are embracing crypto because the finance industry has embraced it, generally speaking.