Those investors who arrived recently to crypto investing are feeling anxious, especially if they bought in during 2021 when Bitcoin and Ethereum were reaching dizzy all time highs. Since then the market has dropped by around 50%. Market commentators worried that new retail investors might be lost forever because of this. Eben Burr, president of Toews Asset Management told Reuters, “If the market decline continues, it will become too painful and retail investors will bail.” However, that doesn’t appear to be the case, especially with the youngest retail investors.
According to Callie Cox, investment analyst at eToro in the USA, the current correction hasn’t deterred the younger investors: “We surveyed 1,000 investors across age groups in March, and 58% of investors ages 18–34 thought Bitcoin would present the best buying opportunity in crypto over the next three months.”
This is surprising, given that Glassnode reported that in May 40% of Bitcoin holders were underwater on their investments at a time when BTC was $33,800. So, are younger investors still as optimistic as they were in March? Bobby Zagotta, CEO of Bitstamp USA, said, “Retail traders between 35-45 years old decreased their crypto balances amid market volatility in the last few weeks. By contrast, our younger users seem to be more bullish and have chosen not to sell.”
Younger people are more optimistic
Is this because younger people are generally more optimistic? A 2021 research study on crypto investors’ beliefs, found that “younger individuals with lower income are more optimistic about the future value of cryptocurrencies, as are late investors.” Cristina Guglielmetti, financial adviser and president of Future Perfect Planning discussed first-time retail investors with Cointelegraph, saying: “The clients I have who own cryptocurrency haven’t really sold their holdings from last year to this year. They’re looking at it more as an educational experience and not assigning an expected return per se. They’re expecting it to be speculative and very volatile.”
Another question on some minds is whether the market can attract new investors. Bobby Zagotta said, “Headlines might have you believe that there’s more volatility than there really is and that investors are fleeing when prices fluctuate. But, that’s not really happening.” Etoro’s Cox added that 42% percent of investors surveyed by eToro in March said they don’t buy crypto because they simply don’t know enough about it: “But, the appetite for decentralization and digital transformation is still there, especially among younger investors.” She believes the reason for this is “younger investors naturally have higher risk appetites, and they’ve seemed willing to stomach these swings because of their longer-term optimism about the technology.” Ultimately, Cox says, “We haven’t seen investors abandon the crypto space en masse, but we have seen them become more selective of what crypto they buy.”