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A new study has found that despite considering themselves to be more “risk averse” than their senior peers, almost a third of all young Australian investors hold or trade cryptocurrencies in the past year.
In a study of Australian investors conducted by the Australian Securities Exchange (ASX), 46% of “next generation investors” — the report’s terminology for investors aged 18 to 24 — described themselves as preferring “steady returns”, however 31% of them have invested heavily in crypto .
“The apparent financial conservatism of young investors does not match their level of investment in crypto,” the report says.
The researchers say the reason young people are investing in crypto comes down to a desire to do things differently than their parents, coupled with the observation that “many of the 1.2 million new investors who have started investing since 2020, tech-savvy and connected to social media.”
According to ASX research by financial research firm Investment Trends, the average cryptocurrency volume for “next generation” investors is $2,700, which is 6% of the weight in their total portfolio, which is double the 3% cryptocurrency distribution for everyone. other age groups of investors.
However, while younger investors owned the majority of cryptocurrencies in relation to their portfolios, it was the “wealth accumulators” — investors aged 25 to 49 — who owned the majority of cryptocurrencies overall, accounting for 69% of total investment in digital assets. . Investors aged 50+ account for only 19% of the total number of cryptocurrency owners.
This report marked the first time that a cryptocurrency has been included as an asset class in the Australian ASX Investor Survey. As such, the report approached the issue with a certain amount of caution, stating that there is still debate as to whether cryptocurrencies could become “fully accepted in mainstream investment.”
However, the study acknowledged that despite its volatility, cryptocurrency remains a popular choice among investors, showing that 29% of all “intentional investors” – people who are not currently investing in any opportunity – are considering some type of investment. investment in cryptocurrency over the next year.12 months.
Related: Australian crypto laws risk falling behind emerging markets: Think Tank
Notably, centralized cryptocurrency exchanges have been highlighted as a potential “handbrake” for growth in cryptocurrency investment in the future.
The recent spate of US Securities and Exchange Commission lawsuits against exchange giants Coinbase and Binance in the United States is a prime example of the challenges centralized exchanges face.
Australia’s cryptocurrency exchanges have also experienced problems in recent months. In May, Binance Australia announced that it was suspending all AUD-denominated services in June after its local payment provider was ordered to stop supporting the exchange. On the same day, Australia’s second-largest bank, Westpac, banned customers from trading on the exchange.
The following month, Commonwealth Bank – Australia’s largest bank – said it could reject some payments to cryptocurrency exchanges, citing a “high risk” of fraud.
the biggest bank in australia, @CommBank has just taken a giant step backward. They are blocking cryptocurrency transactions “for our safety”. pic.twitter.com/4tsddbNPg8
— Charles Edwards (@caprioleio) June 15, 2023
The research for the ASX report was conducted in November 2022 and is based on a detailed online survey of a sample of 5,519 Australian adults.