Cryptocurrencies are becoming a central investment choice for Millennials and Generation Z. According to the Global Retail Investor Outlook 2024 of the World Economic Forum (WEF), a growing portion of young investors allocates over half of their portfolio to digital currencies. This trend is not a temporary phenomenon but reflects a broader change in how the new generations approach financial risk, trust, and investment planning.
The report, based on a survey conducted on 13,000 individuals in 13 countries, reveals surprising data: 62% of Millennials have at least a third of their portfolio in cryptocurrencies, while 35% of Gen Z invests over 50% in digital assets. Additionally, 20% of young people belonging to Generation Z allocate about a third of their portfolio to investments in cryptocurrencies.
But what drives these investors to bet so much on cryptocurrencies? According to the report, the answer lies in a combination of factors ranging from technological accessibility to trust in the values associated with blockchain, up to the influence of social media and digital educational platforms.
Why do young Millennials and Gen Z prefer cryptocurrencies over traditional investment instruments?
A key aspect that emerged from the study is that the new generations perceive cryptocurrencies as more understandable compared to traditional investments like mutual funds, bonds, or ETFs. This perception completely differs from the conventional view, which considers crypto-assets highly complex and risky.
Unlike previous generations, Millennials and Gen Z rely less and less on traditional financial advisors for their investment decisions. Instead, they prefer sources such as cryptocurrency platforms, influencer content and online communities to educate themselves and make decisions independently.
This change in the search for information reflects a greater inclination towards practical learning, rather than adherence to traditional financial schemes. The phenomenon represents a challenge for regulators and financial educators, who find themselves having to guide an audience that prefers tutorials on YouTube to the classic reports from consulting firms.
An investment guided by personal values
Beyond the perception of ease of use, another fundamental factor driving the financial choices of younger generations is the ethical value of investments.
According to the report:
- The 70% of Millennials and 66% of Gen Z choose financial institutions based on alignment with their ethical principles.
- Cryptocurrencies, with their principles of decentralization and transparency, strongly resonate with this mentality.
The interest of young investors is not limited to cryptocurrencies, but also extends to other alternative assets and financial activism. This suggests a growing willingness to use investments as a means to actively influence the market and stimulate innovation and social change.
The adoption of cryptocurrencies is higher in emerging markets
It’s not just the young people from developed countries driving the adoption of cryptocurrencies. The report from the WEF highlights how emerging markets have an even higher level of participation compared to more advanced countries.
Some interesting data emerged from the report:
- 36% of investors in emerging markets own cryptocurrencies, compared to 27% globally.
- Countries like India, Brazil and South Africa show higher adoption rates compared to their Western counterparts.
This dynamic can be partly explained by the fact that, in many emerging economies, cryptocurrencies represent an access route to financial markets in areas with underdeveloped banking infrastructures. Here the cryptocurrency sector offers a unique opportunity to bypass traditional intermediaries and access global investment forms.
The impact of technology: AI and fintech are changing the sector
Another element that has a significant influence on this trend is the growing role of technology in financial management for the new generations.
According to the report:
- The 41% of global investors – and nearly half of Millennials and Gen Z – are willing to delegate their financial decisions to artificial intelligence algorithms.
- The new generations are the most active users of budgeting apps, robo-advisors, and fintech platforms, tools that often integrate cryptocurrencies into their main functionalities.
This data suggests that technological tools are increasingly integrated into the daily management of digital portfolios, making cryptocurrencies a constant presence in the financial habits of the younger generation.
The risks of excessive exposure to cryptocurrencies
Despite the enthusiasm and growth of the sector, the WEF report also highlights the risks associated with this trend. The fact that Millennials and Gen Z allocate such a large portion of their portfolio to an extremely volatile asset raises concerns about long-term financial stability.
Regulators and financial education experts will have to face a delicate challenge: finding effective ways to inform and protect younger investors without limiting the innovation that the bull and bear sector is bringing.
As of today, the learning strategies of the new generations seem to be oriented more towards direct experiences and digital content rather than relying on traditional institutions. This entails new educational and regulatory needs, which will need to adapt to the speed at which this industry evolves.
Conclusion
The World Economic Forum report highlights how Millennials and Gen Z are transforming the investment landscape thanks to their strong inclination towards cryptocurrencies and digital financial technologies.
Personal values, accessibility to global markets, and the centrality of technology are the main drivers of this financial revolution. However, the strong exposure to digital assets raises questions about stability and investor protection, highlighting the need for a balanced approach between innovation and regulation.
The future of investment is increasingly digital and decentralized, driven by the choices of a generation ready to reinvent the global financial system.
