The cryptocurrency market is changing, evolving into an asset class for investors – many of whom are younger – looking for exposure outside of traditional assets like stocks and bonds.
Charles Schwab (SCW 0.13%), a financial services company that offers its clients various investment products, recently conducted a study that shows how far cryptocurrencies have evolved over the past decade. The survey asked 1,000 customers with 401(k)s between the ages of 21 and 70 a series of questions related to investing, retirement, and more. Participants were divided into four age groups: Baby Boomers, Gen X, Gen Y and Gen Z.
There were many recurring themes in the study that generally had to do with the adoption of new technologies in their investment practices or lack thereof. Millennials and Gen Z have consistently shown an interest in less traditional assets and have used smartphones and social media to research and facilitate transactions.
Most interesting was the division of sentiment on cryptocurrencies between younger and older generations. Only 4% of baby boomers owned cryptocurrency, compared to 47% of millennials and 43% of Gen Z.
Additionally, participants were asked about new assets they would like to have access to in their 401(k). Top of the list for Millennials and Gen Z were cryptocurrencies. About 45% of these cohorts wanted cryptocurrency options, while only 31% of Gen Xers and just 11% of baby boomers wanted similar access.
This research shows similar trends to what a Bank of America study found in mid-October: cryptocurrencies are increasingly sought after by younger investors. As this trend continues to evolve, it should further legitimize the asset class – and so it’s a great time for investors to enter now while it’s still early days.
Limit your options
But there are thousands of cryptocurrencies in circulation today. Which should investors focus on?
To get a better idea, we should look at what cryptocurrency financial services companies are interested in. It turns out that there is one that clearly stands out from the rest: Bitcoin (BTC -0.82%).
As the world’s first and most valuable cryptocurrency, Bitcoin has been in a class of its own since its inception in 2009. Over the past dozen years, Bitcoin has grown from a highly speculative asset deemed to be used only by criminals to an asset that is owned by top investors, and even Fortune 500 companies like You’re here.
It is this visibility that has helped it become one of the most sought after cryptocurrencies today, and investment firms are coming to this realization. Competitor of Charles Schwab loyalty became the first financial services company to offer its 401(k) clients exposure to Bitcoin in April. Since then, similar measures have been taken by other companies to meet customer demands. In August 2022, the world’s largest asset management company, black rockin partnership with the popular cryptocurrency exchange Coinbase to offer its institutional clients access to Bitcoin trading.
There are other examples, but simply put, Bitcoin is way ahead of any other cryptocurrency when it comes to becoming a recognized asset. As the second most valuable cryptocurrency, Ethereum might be the next best option after Bitcoin, but the distance between the two is wide. For this reason, Bitcoin appears to be the most likely candidate to go mainstream first among all cryptocurrencies.
We should expect the demand for Bitcoin to seep into the world of finance, business, and even our daily lives, as young investors continue to seek exposure. This process will not happen overnight, or even in the coming months, but will likely take years. That’s why now is a great opportunity to buy Bitcoin with a view to a future where the original cryptocurrency will establish itself as a necessary addition to every wallet.
Charles Schwab is an advertising partner of The Ascent, a Motley Fool company. RJ Fulton has positions in Bitcoin. The Motley Fool has posts and recommends Bitcoin. The Motley Fool recommends Charles Schwab. The Motley Fool has a disclosure policy.
