A recent study conducted by the Australian Securities Exchange (ASX) has revealed that despite considering themselves more risk-averse, nearly a third of young Australian investors, aged 18 to 24, have either traded or currently hold cryptocurrencies. This finding challenges the perception of financial conservatism among younger investors.
According to ASX’s 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 tech-savviness 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, indicates that the median cryptocurrency holding for young investors stands at $2,700, representing a 6% weight in their overall portfolio. This allocation is twice as much as that of other investor age groups, which allocate only 3% of their portfolios to crypto.
While young investors hold the most significant proportion of cryptocurrency relative to their portfolios, it is the “wealth accumulators” aged 25 to 49 who own the largest share of digital assets, accounting for 69% of the total crypto investment. Investors aged 50 and above represent only 19% of the overall crypto ownership.
This ASX report is noteworthy as it marks the first time that cryptocurrencies have been included as an asset class in their Australian Investor Study. The report cautiously states that the full acceptance of cryptocurrencies in mainstream investing is still a subject of debate.
However, the study acknowledges the enduring popularity of cryptocurrencies among investors. It reveals that 29% of “intending investors,” those who currently do not invest, are considering some form of crypto investment in the next 12 months.
Furthermore, the report highlights potential challenges facing centralized cryptocurrency exchanges, labeling them as a potential “handbrake” on the growth of crypto investments. Recent legal actions against major exchanges Coinbase and Binance by the United States Securities and Exchange Commission exemplify these challenges.
Australia’s crypto exchanges have also faced hurdles in recent months. Binance Australia announced the suspension of Australian Dollar-denominated services in June due to regulatory pressures. Australia’s second-largest bank, Westpac, banned its customers from transacting with the exchange, and Commonwealth Bank, the country’s largest bank, cited a “high risk” of scams as a reason for potentially declining certain payments to crypto exchanges.
The ASX’s report is based on an in-depth online survey of 5,519 Australian adults conducted in November 2022. While cryptocurrency’s volatility remains a concern, the study underscores its growing appeal among investors, particularly the younger generation, who are willing to explore alternative investment options beyond traditional assets.