A recent study conducted by the Australian Securities Exchange (ASX) has revealed that despite considering themselves to be more risk averse, nearly a third of young Australian investors, aged 18 to 24, have traded or currently hold cryptocurrencies. These findings challenge perceptions of financial conservatism among young investors.
According to an ASX report, 46% of these “next generation investors” express a preference for stable returns. However, 31% of them have invested significantly in cryptocurrencies. Researchers attribute this contradiction to the desire of younger individuals to differentiate themselves from their parents, coupled with their technological sophistication and social media connectivity. These factors have influenced many of the 1.2 million new investors who entered the market since 2020.
The study, conducted by financial research firm Investment Trends, shows that the average cryptocurrency holdings for young investors is up to $2,700, representing a 6% weight in their overall portfolio. This allocation is double that of other age groups of investors, who allocate only 3% of their portfolio to crypto.
While young investors hold the most significant proportion of cryptocurrencies relative to their portfolios, it is the “wealth accumulators” aged 25 to 49 who own the lion’s share of digital assets, accounting for 69% of total crypto investments. Investors aged 50 and over represent only 19% of overall crypto holdings.
The ASX report is noteworthy as it marks the first time a cryptocurrency has been included as an asset class in their Australian Investor Review. The report is careful to state that the full acceptance of cryptocurrencies in mainstream investment is still a matter of debate.
However, the research acknowledges the enduring popularity of cryptocurrencies among investors. It revealed that 29% of “intending investors”, those who are not currently investing, are considering some form of crypto investment in the next 12 months.
Additionally, the report highlights the potential challenges that centralized cryptocurrency exchanges face, labeling it a potential “handbrake” on the growth of crypto investments. The recent legal action against major exchanges Coinbase and Binance by the United States Securities and Exchange Commission exemplifies this challenge.
Australian crypto exchanges have also faced hurdles in recent months. Binance Australia announced the suspension of its Australian Dollar-denominated services in June due to regulatory pressures. Australia’s second largest bank, Westpac, prohibits its customers from transacting with exchanges, and Commonwealth Bank, the country’s largest bank, cites the “high risk” of fraud as a reason for potentially denying certain payments to crypto exchanges.
The ASX report is based on an in-depth online survey of 5,519 Australian adults conducted in November 2022. While the volatility of cryptocurrencies remains a concern, the study underscores their growing appeal among investors, particularly the younger generation, who are willing to explore alternative investment options. beyond traditional assets.