Despite seeing themselves as more “risk averse” than their older counterparts, nearly a third of all young Australian investors hold or have traded cryptocurrencies over the last year, a new study has found.
In an Australian investor study from the Australian Securities Exchange (ASX), 46% of “next generation investors” — the report’s terminology for investors aged 18 to 24 — described themselves as preferring “stable returns” — yet 31% of them invested substantially in crypto.
Attitude towards investment risk by age group. Source: ASX.“The apparent financial conservatism of younger investors is at odds with their level of investment in cryptocurrency,” the report wrote.
Researchers said the reason that younger people invested in crypto boiled down to a desire to do things differently from their parents combined with the observation that “many of the 1.2 million new investors who've taken up investing since 2020 are tech-savvy and connected to social media.”
According to ASX’s study, which was undertaken by financial research firm Investment Trends, the median holding of cryptocurrency for “next generation” investors stands at $2,700, representing a 6% weight in their total portfolio, double that of the 3% crypto allocation for all other investor age groups.
However, while young investors owned the most crypto relative to their portfolios, it was the “wealth accumulators” — investors aged 25 to 49 — who owned the most cryptocurrency overall, accounting for 69% of the total investment in digital assets. Investors aged 50+ accounted for just 19% of overall crypto ownership.
Overall crypto investment snapshot for Australian investors. Source: ASX.This report marked the first time that cryptocurrency had been included as an asset class in the ASX’s Australian Investor Study. As such, the report approached the subject with a degree of caution, saying it’s still up for debate whether cryptocurrencies can become “fully accepted in mainstream investing.”
Still, the study admitted that despite its volatility, cryptocurrency remains a popular choice among investors, revealing that 29% of all “intending investors” — people who don’t currently invest in any capacity — are considering some type of crypto investment within the next 12 months.
Related: Australia's crypto laws risk being outpaced by emerging markets: Think tank
Notably, centralized crypto exchanges were singled out as a potential “handbrake” for the growth of crypto investment in the future.
The United States Securities and Exchange Commission’s recent spate of legal action against exchange giants Coinbase and Binance in the United States stands as a clear example of challenges facing centralized exchanges.
Australia's crypto exchanges have also faced challenges in recent months. In May, Binance Australia announced it is suspending all Australian Dollar-denominated services in June after its local payments provider was ordered to halt support for the exchange. On the same day, Australia's second-largest bank Westpac banned customers from transacting with the exchange.
The following month, Commonwealth Bank — Australia's largest bank — said it may decline certain payments to crypto exchanges citing a "high risk" of scams.
The biggest bank in Australia, @CommBank has just taken a giant step backward. They are blocking crypto transactions "for our safety". pic.twitter.com/4tsddbNPg8
— Charles Edwards (@caprioleio) June 15, 2023The research for the ASX’s report was conducted in November 2022, and based its findings on an in-depth online survey of a sample of 5,519 Australian adults.
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