Investor Behavior and Youth Adoption in Crypto
AGE DEMOGRAPHICS, BEHAVIORAL TRENDS, AND A MARKET SHARE OPPORTUNITY
It’s been a difficult year for cryptocurrencies, with the overall market capitalization of crypto assets shedding more than $1 trillion since the bull market peak of November 2021. Investors everywhere are wondering if the crypto lows are in, and how they should think about allocating capital in the future.
Recently, Abra, a leader in digital asset wealth management, and Real Vision surveyed thousands of our respective community members to gauge sentiment on the crypto market and gather insights on investor behavior. The findings, detailed below, could help us better understand that behavior, and how it correlates with price action.
About 60% of respondents surveyed have experience investing in crypto while the majority of the other 40% remain interested in the space. Higher income individuals are more likely invested in crypto, but nearly 40% of respondents with a net worth below $25,000 had crypto exposure.
Crypto-friendly respondents preferred video as their method of learning, and security and trust are cited as the most valued features of a crypto trading platform. Surprisingly, fees and transaction costs were of the least concern.
Over 50% of respondents have more than half of their portfolio in crypto, and 89% of those crypto investors plan to buy and hold for the long-term. Active traders (32%) were the next largest contingent.
But what truly stood out were insights on age demographics, behavioral trends, and a potential opportunity for market cap growth.
Of the respondents who were invested in cryptocurrencies, 20% have borrowed against their holdings. The primary reason for borrowing against their crypto was for leverage (55%), while 32% borrowed for a mortgage, 27% used the debt to buy NFTs, 25% borrowed to pay taxes, and 24% borrowed for education.
For some perspective, 43% of retail equity participants were trading on leverage at the height of the pandemic rally in September 2020.
Reasons to Borrow Against Crypto Holdings
For those who have borrowed against their crypto holdings, more than half of the respondents borrowed for leverage.
More than half of the respondents (54%) are looking to add crypto in this economic downturn. Twenty percent of respondents will likely do nothing, while 27% of respondents said that they would liquidate either a portion or all of their assets in a downturn.
Crypto investors who have borrowed against their holdings (20%) tend to be more conservative in downturns than the 80% of investors who have not borrowed. Borrowers are less inclined to add in a downturn, more inclined to liquidate their assets, and also more inclined to do nothing — potentially missing out on buying opportunities.
Actions During Crypto Downturns
Respondents who have borrowed against their crypto holdings are more conservative as they are more likely to liquidate their positions during crypto downturns.
Youth Crypto Adoption
Of the community members surveyed, those with crypto exposure tend to be higher in age. A whopping 74% of respondents over the age of 65 were invested in crypto, while only 36% of respondents aged 19-25 had crypto exposure. Perhaps the most interesting finding with regards to age is the youth adoption.
Thirty-nine percent of respondents under the age of 18 are invested in crypto — a nod to potential adoption by the younger generations.
Experience in Crypto
Respondents higher in age tend to be more likely to have exposure to cryptocurrencies.
An Opportunity to Gain Market Share?
To no one’s surprise, BTC and ETH were the most commonly held crypto assets by respondents with exposure in the space, followed by SOL, AVAX, and ADA. However, the gap is quite wide. The combined percentage of respondents who own SOL, AVAX, and ADA (76%) is still less than those who own BTC (79%)
As the crypto market works through this prolonged downtrend, and investor sentiment turns more positive, there could be a long-term market share opportunity for smaller large-cap assets. If our respondents are any indication, the younger, crypto-friendly generations of investors could play a role in the growth of these assets, as those investors accumulate more wealth and increase their overall exposure to the market.
Cryptocurrencies that Investors have Invested in
*respondents can select multiple answers