Boomers conduct significantly more research than their younger counterparts before investing in cryptocurrency, putting them in a better position.
It’s difficult for me to say as a millennial, but boomers are better at crypto. According to a new report from Bybit and consumer research firm Toluna, they are applying traditional market research methods to crypto projects.
According to the report, 34% of boomers spend “a few days” doing due diligence on a project before investing, which is 50% higher than other generations. Worryingly, “64% of North American investors spend less than two hours on DYOR or do not DYOR at all.”
Boomers are also more likely to concentrate their research on technical aspects such as tokenomics, revenue, and the competitive landscape. In comparison, younger Americans are more likely to value reputational elements such as a charismatic founder and “website aesthetics.”
This demonstrates that being a digital and crypto native is not as advantageous as many people believe. It actually pales in comparison to some of the Warren Buffet-like skills that older investors have developed over time.
Perhaps boomers have more free time than younger generations because they are more likely to be retired. It’s difficult to say, but it appears that the best way forward for young people is to become humble and learn from the elders.
Even though crypto has many unique characteristics that set it apart from other capital markets, it has enough in common to allow for a reasonable crossover in analytical skills. After all, the price of digital assets, like traditional markets, is highly dependent on the balance of market supply and demand.
Investigating the technicals can help to avoid the type of poor decision-making that resulted in large losses in 2022. Several times, I felt really good about purchasing a token based on the project’s white paper and the strong narrative pushing it, only to discover that there were so many venture capital unlocks incoming that the selling pressure would weigh on prices for years to come.
Boomers who are familiar with crunching company numbers and calculating price-to-earnings and price/earnings-to-growth ratios can apply these skills to CoinGecko or CoinMarketCap data. Younger generations must understand the difference between “circulating supply” and “max supply,” as well as the importance of volume.
Indeed, crypto projects that resemble traditional value investments have fared well in the bear market. Investors are becoming more aware of the distinction between protocols that issue tokens as a glorified fundraising method and those that generate revenue and distribute it to holders. So-called “real yield” crypto projects are similar to dividend-paying companies, which boomer investors are likely to be familiar with and may influence some of their investment decisions.
This is not to dismiss the significance of narrative and community in modern investing, particularly in cryptocurrency. For example, following the FTX bankruptcy, decentralized perpetual trading platforms such as GMX, Gains, and ApeX Pro benefited from the pro-decentralization sentiment.
Researching this aspect necessitates a solid understanding of social media, particularly Twitter, which is one of the primary channels for connecting with prominent crypto analysts, founders, and degens. These tools are used by investors to identify narratives, assess where a narrative is in its lifecycle, and gauge market sentiment in general.
However, Millenials and Gen Z are at a disadvantage when it comes to using social media to assess trends because it is no longer novel. It’s Web2, and everyone is already familiar with social media. Indeed, young people use their familiarity with social media against them by overvaluing it as a research tool, whereas boomers are more likely to stick to the facts.
Traditional due diligence in investing continues to separate the men from the boys, as it has done throughout history. As long as this continues, boomers will outperform younger generations because they conduct more research and are more patient when it comes to investing, resulting in higher returns than younger generations, who may jump into an investment without fully understanding what they’re getting into. Look no further than your parents or grandparents for someone trustworthy and knowledgeable about due diligence.
