Before the cryptocurrency was sold off, it was so hot that some retirees converted their pensions into cryptocurrencies in the hope of making excess returns. However, the recent collapse in the encryption market has alarmed potential speculators: this crazy market is not suitable for investors with weak risk tolerance.
Zhitong Financial APP learned that about 27% of Americans between the ages of 18 and 60 (about 50 million) owned or traded encrypted currencies in the past six months, according to a survey released last week by the cryptocurrency exchange KuCoin. However, according to a survey conducted at the end of March, older people are more enthusiastic about the "young asset class" represented by cryptocurrencies than the general population.
A survey at the end of March showed that 28 per cent of people aged 50 and over bet on cryptocurrencies as part of their retirement or early retirement investment plans. According to the survey, the most common reason for them to invest in cryptocurrencies is that they think this is the future of financial markets, they do not want to miss this trend, and they see it as a way to diversify asset allocation.
Is the allocation of cryptocurrency for pensions reliable?
The turmoil in the encryption market in recent weeks seems to have sharply quelled rumors in early 2022 that Bitcoin and other cryptocurrencies would be accepted by mainstream channels and included in pension plans.
Erik Knutzen, chief investment officer of Neuberger Berman's multi-asset class strategy, said: "If they (investors) want to invest in cryptocurrencies, they should only account for a small proportion of their portfolios, and they should be prepared to liquidate cryptocurrencies."" We will not recommend cryptocurrencies to everyone. "
In fact, Bitcoin, the largest cryptocurrency by market capitalization, is currently trading at about $31000, down 60 per cent from its peak of $69000 in November. The collapse of the encryption market may mean that many investors who joined the cryptocurrency this year have lost a lot of money.
Nonetheless, cryptocurrency investors and analysts, like some hawks, are watching closely to see if Bitcoin can bottom out. JPMorgan Chase & Co analyst Nikolaos Panigirtzoglou and his global strategy team said last week that the chaos in the cryptocurrency market had seriously affected investor sentiment, but that some indicators had shown "a good entry point for long-term investors".
JPMorgan Chase & Co said bitcoin funds, including ETF, had seen the largest outflow since May 2021, adding that its position substitution indicator for CME bitcoin futures was approaching the "oversold area". Using the volatility model process based on Bitcoin versus Gold (bitcoin to gold), the team estimates the "fair value" of Bitcoin at about $38000.
The KuCoin survey comes a week after the Federal Reserve conducted a survey of 11000 adults and found that 12 per cent of Americans had used cryptocurrency as an investment last year. The study did not break down participants by age, but found that almost half of investors who held cryptocurrencies for investment purposes had an annual income of $100000 or more, while nearly 1/3 people earned $50, 000 or less.
But if older investors join the cryptocurrency camp, will asset managers scramble to meet this huge demand? Fidelity Investments caused an uproar in financial markets when it announced in April that it would soon allow individual investors to allocate some of their retirement savings to bitcoin through a 401 (k) investment plan.
A Fidelity spokesman said: "Fidelity has been operating and making decisions in good faith at the highest level and has made an unwavering commitment to our customers, including those who save money for retirement plans."
In view of the current investment situation, the general consensus in the market is thatCryptocurrency is a volatile asset class for retirees.。Unless investors are an experienced veteran, such as hedge funds, or able to withstand huge losses, it is best to avoid cryptocurrencies.