Cryptoverse: Will you grow old with bitcoin?

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May 31 (Reuters) – If you assumed crypto was just a game for young people, think again.

It seems like more people in the US are turning to cryptocurrencies to fund their retirement, though the recent market carnage is a stark reminder that this wild market is not for the faint-hearted.

Some 27% of Americans between the ages of 18 and 60 — about 50 million people — have owned or traded crypto in the past six months, according to a poll released last week by crypto exchange KuCoin.

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

Their most popular investment in crypto was that they saw it as the future of finance, they didn’t want to miss out on a hot trend, and they saw it as a way to diversify their portfolios. (See GRAPH)

The market turmoil of recent weeks has stifled talk earlier in 2022 that bitcoin and other cryptos would gain mainstream acceptance and be introduced into pension plans.

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

“We wouldn’t recommend it to anyone.”

Indeed, bitcoin is trading at around $30,000, down 60% from a high of $69,000 in November. And the market crash means many newcomers’ investments are deep in the red.

Nevertheless, crypto investors and analysts are watching like hawks for any indication that bitcoin might rebound.

JP Morgan’s Nikolaos Panigirtzoglou and his global strategy team said last week that the crypto chaos has soured investor sentiment so much that some metrics signal a “good entry point for long-term investors.”

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

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

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$100,000 OR MORE

The KuCoin poll comes a week after a Fed survey of 11,000 adults found that 12% of Americans got into cryptocurrencies as an investment last year.

It did not break down the participants by age, but found that almost half of those who held crypto for investment had an annual income of $100,000 or more, while almost a third had a lower income. at $50,000. Read more

If older investors are part of the new crypto vanguard, has there been a rush by asset managers to meet this demand?

Fidelity Investments caused a stir in April when it announced that individuals would soon be allowed to allocate a portion of their retirement savings into bitcoin through their 401(k) investment plans. Read more

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

But if anecdotal evidence from a summit of investors and asset managers hosted by Reuters in New York last week is any guide, the 401k crypto market may be reserved for it for some time to come.

The general consensus was that crypto is prohibitively volatile for retirement purposes. Unless you are a sophisticated investor, such as a hedge fund, or are prepared to swallow a heavy loss, it is best to steer clear.

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Reporting by Jamie McGeever; Assembly Pravin Char

Our standards: The Thomson Reuters Trust Principles.

The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and freedom from bias by principles of trust.


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