Millennials are changing the investment industry. Unlike in the past when they had a relatively passive role, they are now in the driver’s seat in the investment industry. Today, some of the hottest trends in the investment industry are being led by millennials. For example, a company like Robinhood, which was started by millennials, has managed to disrupt the stock trading and investing industry.
Millennials and investments
Millennials have helped to champion some of the leading themes in the financial market during the Covid pandemic.
Firstly, millennials have boosted their investments into cryptocurrencies, which are now valued at more than $2 trillion. This year alone, the prices of top cryptocurrencies like Cardano, VeChain, Polygon, and Avalanche have risen by more than 1,000%. Similarly, the price of Ethereum has risen more than 600% this year. Read more about the cheapest ways to buy Ethereum and other cryptocurrencies.
Second, millennials were also pivotal in emerging industries like decentralized finance (DeFi). DeFi is an industry that is using blockchain technology to change how business is done.
For example, lending marketplaces are making it possible for people to borrow online using their cryptocurrencies as collateral. Similarly, Decentralized Exchanges (DEXEs) are enabling people to trade cryptocurrencies by bypassing centralized platforms like Coinbase and Huobi. According to DeFi Llama, the total value locked in DeFi has jumped to more than $175 billion.
Third millennials have jumped into the non-fungible token (NFT) bandwagon. Many millennials are now actively creating and selling these NFTs. In the first half of 2021, the NFT industry soared to more than $2.1 billion.
Fourth, they were deeply involved in the so-called meme stocks. For starters, meme stocks were heavily shorted companies that gained significant interest in early 2021. At the time, shares of companies like AMC, GameStop, and Blackberry jumped parabolically, leading to a short squeeze among many hedge funds.
Other assets that millennials are investing in are Environment, Social, and Governance (ESG)-focused funds, and growth stocks.
Millennials and cryptocurrencies
Studies show that millennials have been significantly active in the cryptocurrency industry. One way to look at this is to see the financial results of some of the most popular companies among the millennial generation.
For example, Robinhood has become a public company valued at more than $30 billion. While it is well-known for stocks, Robinhood makes a substantial amount of money from cryptocurrencies like Dogecoin and Bitcoin. This is notable since the average age of Robinhood users is about 31 years.
Similarly, Coinbase went public and is currently valued at more than $50 billion. This makes it one of the biggest financial services companies in the world. A substantial portion of Coinbase customers are in the millennial category.
Other millennial-focused companies that are doing relatively well because of cryptocurrencies are Square, PayPal, and OpenSea.
Why millennials love cryptocurrencies
There are several reasons why millennials love digital currencies. First, these currencies tend to offer substantially better results than traditional assets like stocks and bonds. For example, while benchmark indices like the Dow Jones and the S&P 500 have risen by about 20% this year, digital currencies like Bitcoin, Binance Coin, and Cardano have jumped by more than 500% this year.
Second, many millennials have been inspired by stories of young people who have gone to become cryptocurrency millionaires. As such, most of them have a desire to become that successful.
Third, blockchain technology is changing how things are done around the world. For example, a platform like Ethereum is used to build hundreds of decentralized applications like Aave, Uniswap, and Compound.
These platforms are transitioning the world from a centralized place to a decentralized one. For example, with Aave, anyone can borrow money using their cryptocurrencies as collateral. There is no credit check necessary. Therefore, millennials are positioning themselves for the future of finance.
Fourth, millennials invest in cryptocurrencies because the process has been simplified. Today, the number of cryptocurrencies exchanges has risen and more traditional companies are offering crypto services. These include companies like PayPal, Revolut, and Skrill.
In addition, while many millennials lost their jobs during the pandemic, the amount of liquidity in the market increased. With interest rates so low, many people had access to financing from banks. Many of them took loans to invest in digital currencies.
At the same time, the US government offered significant support to families. In total, it offered more than $6 trillion in stimulus, with most of these funds going to households. These people moved some of these funds to cryptocurrencies. At the same time, with most millennials staying at home during the pandemic, many of them used their savings to invest in cryptocurrencies.
The Covid-19 pandemic led to significant returns in cryptocurrencies and other assets because of the expansionary policies championed by the Federal Reserve. As part of its Covid response, the Fed lowered interest rates and started a quantitative easing program that pushed its balance sheet to more than $8.5 trillion. This, in turn, pushed many millennials to find alternative assets that offer better returns than cash. Cryptocurrencies emerged as one of the most popular assets among millennials.