Research by investment bank giant JPMorgan found that older generations hoarded more gold during the Covid-19 pandemic, while millennials turned to Bitcoin.
The financial crisis caused by the Covid-19 pandemic highlighted different investment approaches for different age groups. According to a new analysis from the bank that used to discredit Bitcoin, younger generations opted for Bitcoin during the financial crisis.
Gold for the old, Bitcoin for the young
Bloomberg cited JPMorgan's latest survey of retail investor behavior during and after the coronavirus crisis. The strategic team led by Nikolaos Panigirtzoglou concluded that the baby boomers (born between 1946 and 1960) decided to avoid having stocks, mainly linked to the technology sector.
Instead, they focused on accumulating assets traditionally considered "safer" and less volatile, such as gold and government bonds. "Previous generations continued to allocate their excess liquidity to government bond funds, the purchase of which remained strong during June and July," the study says.
On the other hand, and perhaps unsurprisingly, younger generations have allocated more funds to riskier assets, such as stocks and cryptocurrencies, particularly Bitcoin. Finally, the analysts pointed out that the two generations show serious divergences in their preferences and concluded that "the older generations prefer gold, while the younger ones prefer Bitcoin".
Interestingly, JPMorgan's conclusion perfectly matches Robert Kiyosaki's opinion. Saying that gold, silver, and Bitcoin could educate people, the author of Rich Dad Poor Dad claimed that precious metals are for the elderly, while Bitcoin is for the young.
BITCOIN educates young. Most gold guys old. Bitcoin informing new generation on why old guys like gold. OLD GOLD-GUYs don’t like corrupt FED. Young anti-Fed investors in gold, silver & Bitcoin makes people smarter richer, stronger against Fed working for Wall St not Main St.
– therealkiyosaki (@theRealKiyosaki) July 23, 2020
This may explain the success of Bitcoin
This trend may be proof of the future success of Bitcoin, while a great transfer of wealth between generations is expected in the next few years through inheritance.
A study by Kraken sought to quantify the potential flow of wealth in Bitcoin. To do this, they considered the rate of adoption of innovative technologies, the amount of wealth to be inherited, and the expected allocation of wealth to Bitcoin in 2044, or "the peak of the allocation."
They also made assumptions about future investment rates based on preferences and inheritance tax. If the expected requirements are met, and Millennials allocate 5% of their wealth after a 2% tax on Bitcoin, then by 2044, the total amount invested will be close to $ 1Tri.
By also implying the marginal supply for this scenario, the report finally predicted that Bitcoin would reach $ 350,000 in 2044. However, it also said that this is based only on the wealth of the US inheritance which means it excludes to the rest of the world and therefore would be a relatively “safe” forecast.
If this happens, the total market value of BTC will increase to more than $ 6Tri. Although it seems like an unlikely outcome at this point, Binance CEO Changpeng Zhao pointed out how this could happen in the next few years.
Meanwhile, gold and Bitcoin continue to rise
As previously reported, gold has just passed the $ 2,000 mark and doesn't seem to stop there. Gold has managed to appreciate more than 30% since the beginning of the year, second only to Bitcoin, which rose 57% despite the crisis. For both digital and real gold, analysts believe the rally won't stop there.
According to Goldman Sach, by the end of the year gold is projected to reach US $ 2,300.00. The main reasons for this unprecedented increase are as follows:
- Low interest rate, which makes government bonds less attractive;
- Political instability in the United States and in the cold "new war" with China;
- Possible devaluation of the dollar and high inflation after the crisis.
But despite the rise, many technical indicators show that gold is overbought. What to expect from gold? And the digital gold?