According to CNBC’s Millionaire Survey, most millennial millionaires have most of their fortune in crypto, and they plan to add even more in 2022 despite the recent price cuts.
According to a study in which 83% of millennial millionaires own cryptocurrencies, investors have investment assets of at least $ 1 million (excluding primary residence). According to the survey, more than half (53%) have at least 50% of their wealth in cryptocurrency, and almost a third have at least three-quarters of their wealth in bitcoin, ether, and other types of cryptocurrency.
The crypto holdings of millennial millionaires are in stark contrast to the older generations of millionaires. According to the survey, only 4% of baby boomers own any cryptocurrency, while more than three quarters of Gen X investors do not own any cryptocurrency.
The results show that cryptocurrency is creating a huge generational divide in investing and wealth creation. While older generations of millionaires are still largely skeptical of cryptocurrency and its future, cryptocurrencies have become a major source of wealth creation and asset growth for many young investors who came early and saw quick returns.
“This is a big difference between different generations of the rich,” said George Wolper, president of Spectrem Group, which is conducting the survey with CNBC.
Despite the recent drop in prices for bitcoin and other cryptocurrencies, millennial millionaires are not planning to cut back on their cryptocurrency investments. About half (48%) plan to increase their assets over the next 12 months, and another 39% plan to maintain their current cryptocurrency levels. Only 6% of millennial millionaires plan to cut back on their cryptocurrency investments over the next year.
Digital Cryptocurrencies, Bitcoin, Ripple, Ethernum, Dash, Monero, and Litecoin.
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With so many millennials and Gen Z investors becoming millionaires from the crypto economy, this is likely to remain a centerpiece of their investments in the coming years. This created a new dilemma for asset management firms. Much of the existing business of private banks, wealth management firms and consultants is carried out by wealthier older clients who do not want cryptocurrency and the associated risks in their portfolio or products. However, their future depends on next-generation customers looking for crypto products and advice.
“I’m not sure the wealth management industry has realized that they really need to think of them as completely different generations,” Wolper said. “Most firms were hoping to ignore this. But millennial millionaires are not going to just “grow” out of cryptocurrency. “
Wolper said many asset management firms are reluctant to add cryptocurrency directly to their investment platforms due to legal and performance risks. However, with the advent of more and more crypto financial products, including crypto ETFs, now many more firms can start offering crypto products to young investors.
“This allows them to offer access to bitcoins and other cryptocurrencies without being the direct holder of them,” he said.
Wolper said that there are two broad categories of millennial crypto-investors: those who have made their millions from cryptocurrency, and those who have added to their existing wealth (mostly from inheritance or startups) by investing in cryptocurrency. According to a Spectrem poll, 45% of millennial millionaires consider inheritance to be a factor in their wealth. Among millennials with incomes of $ 5 million or more, inheritance was the main factor (75%) in their wealth.
At the same time, millennials who dabbled in crypto many years ago, with small stakes in their income, became self-made millionaires thanks to cryptocurrency returns that far outstripped stocks and other asset classes. The question now is whether millennials will remain in the cryptocurrency market – and in the ranks of millionaires – if Bitcoin and other tokens continue to decline.
“They seem to be happy with the instability,” he said.