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The price of bitcoin has dropped 48% in the last six months. But according to Bank of America’s 2022 Private Bank Study of Wealthy Americans, wealthy millennials are still pouring cash into crypto.
Stories of people losing their life’s savings when the crypto market crashed earlier this year in May didn’t scare people ages 21 to 42.
According to the study, conducted between May and June 2022, 75% of wealthy young people — defined as high net worth and ultra high net worth — agreed that it’s no longer possible to achieve above-average returns in traditional investments like stocks and index funds, compared to 32% of wealthy people ages 43 and up.Rich young investors believe crypto can help them build more wealth
In the study, 29% of wealthy young investors said crypto presents a leading opportunity to build wealth, with real estate as a close second at 28%. On the other hand, 41% of older investors said traditional investments, such as stocks, index funds, and mutual funds, are the leading way to build wealth.
Despite the volatility of cryptocurrency, three times as many young investors believe that cryptocurrency is an effective long-term investment vehicle compared to older investors.
Financial experts recommend that crypto investors balance their riskier bets with safer, more traditional investments like stocks and bonds, and say crypto should make up a very small portion of your portfolio, ideally less than 5%.
Young investors surveyed by Bank of America said they allocate 15% to cryptocurrencies, while those aged 43 and up said they only invest 2% of their cash in crypto.Over half of young investors get crypto advice on social media
More than 60% of young people said they understand cryptocurrency quite well, compared to 12% of wealthy people ages 43 and up; young investors said they get the majority of their crypto advice on social media platforms like TikTok, Instagram, or Reddit.
Older investors said they turn to internet research or professional advisors at higher rates than young people.
There’s no way to know how the crypto market will react to rising inflation rates and a looming recession. But if you decide to start investing or continue investing in crypto, just know many wealthy millennials are on the ride with you.