Friday, December 6, 2021

Surprise! Millennials Embrace Bitcoin While Boomers, Gen-Xers Hold Traditional Wealth

Charles Schwab has released its Q3 investment indicator report, a quarterly report that breaks down investment allocation across the firm’s brokerage accounts. It corroborates what most of us have known for a while now: Millennials are more attuned to the value of bitcoin than their Gen-X and Boomer counterparts.

According to the report, the Grayscale Bitcoin Trust (GBTC) was the fifth most popular equity across Millennial accounts managed by the brokerage firm, representing 1.84 percent of all assets held under management for the age group. Millennials represent 12.9 percent of Charles Schwab’s clients, compared to 41.8 percent for Gen-Xers and 38.6 percent for Boomers.

Topping the list for Millennials was Amazon (7.87 percent), followed by Apple (6.18 percent), Tesla (3.22 percent) and Facebook (3.03 percent). In a twist of irony, Berkshire Hathaway — a holding company founded and helmed by famed bitcoin bear Warren Buffett — lagged just behind GBTC at 1.73 percent.

By contrast, Berkshire Hathaway featured more prominently for both Gen-X and Boomer investors, taking up the third spot in both categories for 2.37 and 2.75 percent, respectively. Whereas Amazon topped Apple for the Millennial age group, these two stocks traded places for Gen-Xers and Boomers, with Apple usurping the top spot from Amazon.

The Millennial Embrace of Bitcoin

Grayscale’s Bitcoin Trust did not break into the top ten of Schwab’s Gen-X and Boomer portfolios, nor did Tesla or the Walt Disney Co. Even so, to see GBTC featured among blue chip stocks in the Millennial category could be considered a legitimizing milestone for an asset that Warren Buffett has lambasted as “rat poison squared.”

And it also speaks to the notion that Millennials, accustomed to growing up in an ever-evolving digital environment, will warm up to bitcoin before their older generational counterparts. Per a U.S. survey conducted on behalf of Blockchain Capital, 27 percent of surveyees under the age of 35 reported that they’d rather own bitcoin than stocks. within this same age group, 37 percent indicated that they owned stock, while 20 percent said they owned bitcoin — a data point that Blockchain Capital general partner Spencer Bogart called “particularly surprising” when compared to the fact that only 37 percent of people under age 35 are invested in the stock market.

The Millennial generation’s relative apathy toward the stock market — and, obversely, its attraction toward bitcoin — speaks to the gulf of wealth ownership between generations in the U.S. According to a 2019 Federal Reserve Report by Business Insider, Boomers owned roughly 21 percent of all American wealth when, in 1989, they reached roughly the age Millennials are today. By comparison, Millennials own a piddling 3 percent today. Meanwhile, the Boomers now control 60 percent of wealth share in the U.S., while Gen-Xers own some 16 percent. 

Millennials have gravitated toward bitcoin and other assets that haven’t been concentrated in the preceding generations (such as Tesla and Facebook) perhaps in an attempt to correct this wealth gap. 

At the least, GBTC, which sells bitcoin at a hefty premium, has been active since 2015 and has proved itself a stand-in for other regulated institutional on-ramps, such as a bitcoin ETF. 

The Schwab survey demonstrates that the demand for bitcoin among younger generations is there; if there were other, more buttoned-up methods of buying and holding it for your average investor, perhaps we’d see even more — especially among a generation that holds less than a sliver of the wealth that their parents held at the same age.

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