Crypto being just for teenagers is long gone and it’s time to take another glance.
More people in the United States than ever before appear to be turning to cryptocurrencies to help fund their retirement, despite recent market volatility serving as a stark reminder that this volatile market is not for the faint of heart.
According to a poll published last week by crypto exchange KuCoin, 27 percent of Americans aged 18-60, or approximately 50 million people, have owned or traded cryptocurrency in the previous six months.
According to a survey conducted at the end of March, older people are more committed to the young asset class than the general population, with 28% of those aged 50 and up betting on crypto as part of their early retirement plans.
Their top causes for investing in cryptocurrency were that they viewed it as the future of finance, that they didn’t want to miss out on a hot trend, and that they saw it as a way to expand their portfolios.
The recent market turmoil has hushed earlier in 2022 predictions that bitcoin and other cryptocurrencies would gain mainstream acceptance and be integrated into pension plans.
Erik Knutzen, Neuberger Berman’s chief investment officer for multi-asset class strategies stated that if the investors need crypto, it should be a very small percentage of their portfolio, and they should also be ready to lose it.
It is not something we would recommend to everyone. Indeed, bitcoin is currently trading at around $30,000, down 60% from a peak of $69,000 in November. Furthermore, the market meltdown has left many newcomers’ investments in the red.
Nonetheless, cryptocurrency investors and analysts are keeping a close eye out for any signs that bitcoin may be on the mend.
Last week, JP Morgan’s Nikolaos Panigirtzoglou and his global strategy team stated that the crypto chaos had soured investor sentiment to the point where certain metrics indicated a “good entry point for long-term investors.”
JP Morgan reported that bitcoin funds, including exchange-traded funds (ETFs), experienced the largest outflow since May 2021, and that its position intermediary for Chicago Mercantile Exchange bitcoin futures was impending overestimated territory.
The team estimates bitcoin’s “fair value” at $38,000 using a model in terms of the unpredictability ratio of bitcoin to gold.
$100K or more
The KuCoin poll comes just a week after the Fed found that 13% of Americans dabbled in cryptocurrencies as an investment last year in a survey of 11,000 adults.
It did not divide participants by age but found that nearly half of those holding crypto for investment had an annual income of $100,000 or more, while nearly a third had an income of $50,000 or less.
Fidelity Investments made headlines in April when it announced that individuals will soon be able to invest a portion of their retirement savings in bitcoin through their 401(k) plans.
According to a Fidelity spokesperson, Fidelity’s operations and decisions are always made with the highest level of uprightness and unswerving commitment to their customers which includes even those saving for retirement. However, if informal proof from a Reuters-hosted summit of investors and asset managers in New York last week is any indication, it may have the 401k crypto market to itself for the foreseeable future.
The consensus was that cryptocurrency is too volatile for retirement. It is best to avoid it unless you are a sophisticated investor, such as a hedge fund, or are willing to accept a significant loss.
