Cryptocurrency: will you grow old with bitcoin?

If you assumed that crypto was just a game of a young person, think again.

More people in the United States than ever before are switching to cryptocurrencies to help finance their pensions, it seems, even as the recent market carnage gives a stark reminder that this wild market is not for the faint of heart.

Some 27% of Americans aged 18-60 – about 50 million people – have owned or traded crypto in the past six months, a survey published last week by crypto exchange KuCoin found.

However, older people are more committed to the young asset class than the general population, according to a survey conducted in late March, with 28% of those aged 50 and over betting on crypto as part of their early retirement plans.

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Their most popular for investing in crypto were that they saw it as the future of finance, they did not want to miss a hot trend, and they saw it as a way to diversify their portfolios.

The market turmoil of recent weeks has predicted earlier in 2022 that bitcoin and other crypto mainstream would gain acceptance and be drawn into retirement plans.

“If they (investors) want crypto, it must be a very small allocation of their portfolio, and they must be willing to lose it,” said Erik Knutzen, chief investment officer for multi-asset class strategies at Neuberger Berman.

“We would not recommend it to anyone.”

In fact, bitcoin is trading at around $ 30,000, 60% down from a peak of $ 69,000 in November. And the meltdown of the market means that investments from many newcomers are deep in the red.

Nevertheless, crypto investors and analysts look like hawks to any indication that bitcoin could return.

JP Morgan’s Nikolaos Panigirtzoglou and his global strategy team said last week that crypto-chaos had so polluted investor sentiment that certain metrics signaled a “good entry point for long-term investors.”

Bitcoin funds, including exchange traded funds (ETFs) saw the largest outflow since May 2021, JP Morgan said, adding that its position proxy for Chicago Mercantile Exchange bitcoin futures is approaching the oversold territory.

Using a model based on the volatility ratio of bitcoin to gold, the team estimates “fair value” for bitcoin at $ 38,000.

$ 100k or more

The KuCoin poll comes a week after a survey of 11,000 adults by the Fed found that 12% of Americans made investments in cryptocurrencies last year.

It did not break down participants by age, but found almost half of those who crypto for an investment had an annual income of $ 100,000 or more, while nearly a third had an income below $ 50,000. read more

However, as older investors are into the new crypto vanguard, has there been a rush of asset managers to meet this demand?

Fidelity Investments caused a stir in April when it announced that individuals will soon be allocating part of their retirement savings in bitcoin through their 401 (k) investment plans.

“Fidelity operates and always makes decisions with the highest level of integrity and an incredible commitment to our customers, including those who are saving for retirement,” a Fidelity spokesman told Reuters.

But if anecdotal evidence from a Reuters-hosted summit of investors and asset managers in New York last week is a guide, it could have the 401k crypto market for a while longer.

The general consensus was that crypto bans are volatile for retirement purposes. Unless you’re a sophisticated investor, like a hedge fund, or are ready to swallow a sharp loss, it’s best to steer clear.

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