When Elon Musk tweets a broken-heart emoji, Bitcoin has been known to panic. So, why isn’t it flying off the handle as we seem to be on the verge of World War III?
Part of this might be attributed to the new HODLers.
Young retail investors relying on bitcoin for long-term benefits rather than short-term gains are adding to the ranks of these true believers, whose moniker sprang years ago from a trader misreading “hold” on an internet forum.
According to some market observers, this pattern might help stabilize the famously volatile crypto market and perhaps offer a long-term floor, citing the fact that bitcoin is up approximately 5% since the Russian invasion.
According to research conducted by multi-asset retail investing platform eToro, which claims to have millions of users, people aged 18 to 34 were considerably more likely to invest in crypto than anybody else, with 66% of that age group holding bitcoin and other digital currencies. This is up from 46% in July of the previous year.
Perhaps more significant, more than a third of those who have invested in cryptocurrency believe in its long-term worth as a “transformative asset class.”
Callie Cox, an investment analyst at eToro in the United States, defined these folks as “HODLers in a nutshell.”
“People who trust in the technology are less inclined to sell when bad stories hit the news,” she said, adding that she expects more retail investors to purchase future drops in cryptocurrency prices.
While the eToro survey of 8,000 investors is simply a snapshot, the results are consistent with other platforms. For example, cryptocurrency exchange Currency.com reports that 31% of its customers are between the ages of 23 and 30, and 20% are between the ages of 18 and 20, while another exchange Busha reports that its typical trader is between the ages of 18 and 40.
Larissa Bundziak is an excellent example of a youthful HODLer.
“I don’t believe cryptocurrency is a get-rich-quick scheme. That is not the whole tale, though “said the Ukrainian public relations specialist, 28 years old and stationed in the United States.
Her bitcoin investment plummeted from $19,000 in late 2017 to roughly $3,000 by January 2019, but she “kept putting money in, and then all of a sudden, it was heading to $60,000.” She intends to continue expanding her assets.
“It’s about being able to transfer it whenever and wherever I want, to my family in Ukraine or anywhere I want in the globe, and not having my money made by a bank or a third party where I don’t know what’s going on,” she said.
Last year, throngs of tiny investors propelled “meme stocks” such as GameStop to stratospheric heights, dispelling any concerns that the retail trader can be a strong and contrarian force in financial markets.
For bitcoin, a rising group of retail investors who are in it for the long haul might amplify the stabilizing impact of long-term investors who are also increasing their holdings of the cryptocurrency.
On February 24, when Russian forces pushed into Ukraine, bitcoin fell 14% to roughly $34,000. It has, however, climbed by 15% since then.
This seems to be a very mild move for an asset that has been prone to huge and unexpected swings throughout the years. However, if bitcoin has taught us anything, it is to anticipate the unexpected.
Bitcoin sank 35% in May last year when Musk stated Tesla would no longer accept the cryptocurrency for vehicle sales; it fell again in June after he tweeted “#Bitcoin,” a broken-heart emoji, and a photo of a couple contemplating a breakup.
A Crypto Trader’s Profile
Another evident demographic tendency in the crypto sector is that traders are mostly male.
According to the eToro poll, 38% of male investors possess cryptocurrency, compared to 19% of female investors.
According to a poll conducted by the U.S. brokerage Robinhood, 41% of female investors have never and will never invest in cryptocurrency, compared to 24% of male investors.
“The gender investing skill gap is real, and it persists despite a lot of interest and retail activity in the crypto market last year,” said Christine Brown, chief operating officer of Robinhood’s crypto business.
According to market participants, the male tilt might be due to a variety of factors.