It was hard to ignore Bitcoin in 2017. The cryptocurrency’s meteoric rise – from about $1,000 at the start of the year to about $20,000 as the year drew to a close – made everyone sit up and take notice.
That trend has certainly turned heads among millennials, a group often seen as being reluctant to risk their hard earned cash on the stock market. Indeed, TD Ameritrade chief market strategist JJ Kinahan told CNBC: “People complain that we haven’t gotten millennials to trade. Maybe this isn’t the product I’d like people to start with, but this is the greatest opportunity we’ve had in the market to get people who weren’t traditionally interested in the market.”
So, why are younger people attracted to Bitcoin and its fellow cryptocurrencies?
It’s hard not to be excited by the story of Bitcoin. Whether you think its incredible gains will continue in 2018 or not, the events of the past 12 months have been staggering. Bitcoin has continually defied critics and traditionalists and early adopters are now sitting on a tidy sum of money. It’s easy to see why any would-be investor would be wowed by the potential gains to be had. Movements in this market are more dramatic and – frankly – interesting than those that have attracted older investors for years. Not only that, but newer cryptocurrencies offer investors a chance to jump into the market even if they ‘missed out’ on Bitcoin. The race is already on to find the ‘next Bitcoin’, and this has the power to capture the imagination.
They’re digital natives
Most millennials are digital natives and their relationship with technology makes cryptocurrencies a natural investment choice. They understand what Bitcoin is – a failure to do so causes much mistrust among traditional investors – and like the security and privacy it can provide. Millennials are also open to the new ways in which trades can take place – using smartphone apps to carry out CFD trading, for example, on price movements in cryptocurrency markets. This sort of trade requires relatively little investment – you don’t have to take ownership of an asset for yourself – and it is a quick and easy way for newcomers to get started. It’s also a natural progression from using banking and finance apps on a smartphone to organise current and savings accounts.
They don’t want to take the traditional route
It’s also important to consider what turns millennials away from other forms of investments. Complicated funds and trades that require in depth knowledge of the market are a barrier, but so too is a general mistrust of the system. Many millennials came into the world of work in and around the banking crash of 2008 – or at least have been scarred by the sluggish decade of non-growth since – and welcome an asset free of control from governments or central banks. Given their experience, it’s perhaps no wonder that a good chunk of 18-34 year olds would rather put their money in Bitcoin than government bonds or stocks.
As a non-traditional, exciting, lucrative investment that suits digital-savvy traders, it’s clear to see why millennials might be more attracted to putting their money into cryptocurrencies than other forms of investment.