Part of that could be due to newer HODLers.
Young retail investors betting on bitcoin as a long-term proposition rather than for quick gains swell the ranks of these true believers, whose name emerged years ago because of a trader who misspelled “hold.” ” on an online forum.
This trend could help stabilize the notoriously volatile cryptocurrency market and potentially provide a long-term floor, according to some market watchers who point to the fact that bitcoin is up about 5% from before the Russian invasion. .
A study by multi-asset retail investment platform eToro, which says it has millions of users, found that people between the ages of 18 and 34 were far more likely to invest in crypto than anyone else, at 66% of this age group owning bitcoins and other digital currencies. This figure is up from 46% last July.
Perhaps more tellingly, more than a third of those invested in crypto said they believed in its long-term value as a “transformative asset class”.
Callie Cox, investment analyst for eToro in the US, describes these people as “HODLers in a nutshell”.
“People who believe in technology, they will be less likely to sell when scary stocks cross the band,” she said, adding that she expected to see more retail investors buying future lows in prices. of crypto.
Although eToro’s survey of 8,000 investors only provides a snapshot, the results are consistent with those of other platforms. Cryptocurrency exchange Currency.com reports that 31% of its customers are between 23 and 30 years old, and 20% between 18 and 20 years old, for example, while another exchange, Busha, reports that its average trader is between 18 and 40 years old.
Larissa Bundziak is the typical example of a young HODLer.
“I don’t think crypto is some kind of get-rich-quick scheme. That’s not the whole story,” said the 28-year-old U.S.-based PR professional from Ukraine.
She watched her bitcoin investment plummet from $19,000 at the end of 2017 to almost $3,000 in January 2019, but she said she “kept putting money in, and then all of a sudden, spent $60,000.” She plans to continue to increase her holdings.
“It’s about being able to send it how and when I want, my family in Ukraine or wherever I want in the world, and not having my money made by a bank or a third party where I don’t know what is going on with him,” she said.
EXPECT THE UNEXPECTED
Any doubts that the retail trader can be a powerful, contrarian force in financial markets were dispelled last year when hordes of small investors took “even stocks” such as GameStop to dizzying heights.
When it comes to bitcoin, a growing cohort of retail investors who are long-term investors could compound the stabilizing effect of long-term investors who are also doubling their cryptocurrency reserves.
When Russian troops entered Ukraine on February 24, bitcoin initially fell 14% to around $34,000. However, it has since increased by 15%.
This seems relatively mild for an asset subject to wild and unpredictable fluctuations over the years. But beware: If bitcoin has taught us anything, it’s to expect the unexpected.
Musk seems to have a special power; bitcoin fell 35% in May last year after he said Tesla would no longer accept cryptocurrency for car purchases; he dropped again in June after he posted “#Bitcoin,” a heartbroken emoji and a photo of a couple discussing a breakup.
PROFILE OF A CRYPTO TRADER
Another demographic trend in the cryptocurrency market is also emerging: traders are predominantly male.
eToro’s survey showed that 38% of male investors own crypto, for example, compared to just 19% of female investors.
A survey by US broker Robinhood found that 41% of female investors said they had never invested and would never invest in crypto, compared to 24% of male investors.
“The investment skill gap between men and women is real and it persists even though the cryptocurrency market has generated a lot of interest and involvement from individuals over the past year,” Christine said. Wood, chief operating officer of Robinhood’s cryptocurrency business.
According to market players, there could be various reasons for this male dominance.
“Cryptocurrencies sit at the intersection of finance and technology, which are in themselves male-dominated sectors,” said Ophelia Snyder, co-founder of Swiss crypto product provider 21Shares & Amun Tokens.