reater volatility in the financial markets means opportunities for big gains but also higher risks. Cryptocurrencies are highly volatile and often move faster than traditional currencies.
This attitude towards risk as a whole is also reflected in the motivations of Older Millennials to trade crypto. 27% of the age group said that they trade crypto for the possibility to make quick gains to improve their current lifestyles. This is in stark contrast to the 43% of traders aged 55+ who see it as a possibility to boost their savings and retirement funds.
The findings come as part of the State of Crypto report released by OANDA, a global leader in online multi-asset trading services. Jessica Beckstead, Managing Director of North America & US CEO at OANDA believes that:
"Digital assets can help traders diversify from traditional financial assets such as fiat currencies or equities. Unlike fiat money, most cryptocurrencies don't see their value diluted through inflation, but they remain highly speculative and unpredictable.”
“There's no doubt that crypto can be volatile, but for some traders, that volatility provides a thrill - more volatility can mean significant gains, but also higher risks. Given this volatility, traders may want to consider using features such as stop losses to protect their profits and manage their risk."
While the risk appetite of traders is linked to their level of tolerance for handling the impact of volatility in a rational manner, there are other factors at play.
The generational divide uncovered in this survey appears to highlight a wider link between trading behavior and socio-cultural factors affecting traders. When asked about optimism on trading returns in 2023, for example, divorced people were among the most pessimistic – with only 65% optimistic versus 82% of married people.
The motivation of traders when investing in crypto varied greatly for those with children and without as well. 21% of respondents with dependents said they had a high appetite for risk compared to just 11% of those without children. Posing the question: are parents keener to take the risk to get the chance to secure the future of their families?
Professor Brendan Burchell, Professor of Social Sciences at the University of Cambridge, UK, commented on the impact of the data:
"This new US data is consistent with existing knowledge on crypto-traders. For instance, the different routes for entering crypto-trading, be it sports gambling for younger traders or through more conventional investing of savings for older investors. Thus, it advances our understanding. It is impossible to comprehend the impact of crypto-trading on individual traders without understanding those differences.”
"This survey conducted by OANDA is therefore invaluable in starting to understand the multifaceted differences between types of traders and their reasons for investing their level of market optimism and their reactions to large variations in prices. After a dearth of good, empirical evidence on the behavior of traders in cryptocurrencies, we can now begin to delve into the fundamental differences between their behavior compared to the psychology of trading traditional shares. "
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