Should Millennials Invest in Cryptocurrency?
A question that has been considered by every Millennial contemplating on their financial future – should Millennials invest in cryptocurrency? This will be one of the truly great questions of the generation, considering the hype surrounding these crypto phenomena. Those that invested within the last few years have seen tremendous gains – some Bitcoin investors made a 600% return if they invested with the last 12 months alone! Cryptocurrency will continue to shape the global financial system in the decades and perhaps millennia to come. But is now the time for Millennials to get into the crypto?
At the time of this particular publishing, the best answer is absolutely not! And the reasonings behind this conclusion are intriguing.
It is true that returns have been exponential in the past, however, that was before crypto became a household quip. This newfound understanding has brought the potential of this financial space to light, unfortunately to its detriment.
The volatility of cryptocurrencies are well known but these shifts have magnified as retail investors, crypto “whales”, influencers, app developers, and regulators have increased their involvement. And the resulting trends have been less than stellar.
Crypto Retail Investors
Generally speaking, retail investors are not considered long-term investors, and many are new to the investment game; a financial micro-segment that is growing at a significant rate as Millennials and Gen Z get more involved. This lack of tacit financial acumen coupled with the increasing size of this segment means that the old rules and investment indicators are shifting towards obsolescence. This also means that the investment risk sensitivity of an already precarious currency sector has been magnified.
And those crypto whales, often holding millions, if not billions in crypto assets, are not helping the case. At a whim, they have the power to manipulate the market to their financial gain. Consider a large holder pulling out a substantial stake in a particular currency at a high buy point; let us consider Dogecoin for this example, of which has several major asset-holding billionaire players. This move will quickly tank the market, making those retail and interested investors react and sell, further driving the market down.
Can you guess what those whales are apt to do once the market is down and the price point is low? They return and buy back those assets which drives that price back up – rinse and repeat!
Social influencers can also play a substantial role in cryptocurrency outcomes. Those invested in Dogecoin met more than a 15% loss after Elon Musk, the billionaire of whom has been deemed the Doge Godfather, dispelled a lackluster SNL performance earlier this year in May. Though he is certainly not the only notable influencer, the market has yet to recover from that pivotal moment.
In fact, you can make a case that these social lights have the biggest stick during this nascent crypto revolution.
As the crypto-wave swells, with more than 1.5 trillion in crypto assets circulating the market, there is no shortage of apps to choose from to get into the scene, including:
These apps make crypto inclusion relatively seamless, however, most of these apps have a history of freezing or glitching during high crypto trade volume periods. For example, those interested in Doge during the afore mentioned Elon’s SLN performance decided to panic sell as the apps, notably eToro and Robinhood froze, rending all buy-sell options “pending”, cascading response into a panicked sellers’ market.
Frankly, the apps are not ready to service the crypto demand.
With significant interest and several trillion at stake, those companies, organizations, and even sovereign nations such as the United States of America, the United Kingdom, and China, of which has made Bitcoin Mining a punishable offense, are seeking protective obviation or regulation before buying into commercial cryptocurrency usage.
This active regulation, seen on a global scale, debunks the capitol margins previously garnered as the world discerns how it will move forward in this evolving space.
Millennials and Crypto
Should Millennials invest in crypto right now? As of today’s publishing, due to the building influences of this digital asset space, the perceived market value will largely diminish before it grows – however, it will grow.
Concede that now is not the right time but use this time to understand cryptocurrency, concede that there will be an optimal time to invest, and concede that it will be imperative to be financially ready.
Crypto is here to stay.