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Will crypto become a part of retirement portfolios?

The awareness of cryptocurrencies has rapidly increased as they are not just seen as speculation, but as long-term investments.

Cryptocurrencies have come a long way since their creation. Thousands of bitcoins could have been bought for a couple of bucks. Then one bitcoin was worth a dollar, while now it’s worth about $20,000. 

The great returns that cryptocurrencies offer are drawing new investors into the space every day. It is estimated that more than 300 million people use crypto, and this number continues to rise; expecting it to reach 1 billion by 2025. Now investors are even considering adding crypto to their retirement funds, especially Gen Z and Millennials.

Crypto in a retirement portfolio?

There are many cryptocurrencies that fell by 99% or even more and will never be considered a good long-term investment. However, some stood the test of time and have risen in the long run, like Bitcoin or Ethereum. Bitcoin crashed many times since it was created, but it always came back stronger. 

Related article: Bitcoin medium-term analysis: Is local bottom near?

That is why many Gen Z and Millennials are invested in these digital assets and want them to be a part of their 401(k) retirement plans. According to the survey by Investopedia, which polled 4,000 US adults, 28% are keen on adding cryptocurrencies to their retirement portfolio. About half of the respondents claimed to have a basic understanding of digital currencies, but most of them invest despite knowledge gaps. 

“Our relationship to money, investing, and financial planning has radically changed in the past few years as new asset classes like crypto and NFTs have emerged just as millions of people are taking their first steps into investing,” said Investopedia editor Caleb Silver.

Where do generations invest? Source: investopedia

As seen from the chart, Millennials invest in assets the most out of all generations. They are especially keen on crypto, with a staggering 38% of Millennials. Moreover, Gen Z and Gen X seem to be similarly bullish on this new asset class. The survey also found that most of each generation still relies on traditional income sources like 401(k), but wants crypto as a part of it. 

Several large asset managers are already taking steps to make this happen, though crypto-based retirement funds have been in the works since early 2019. As the interest in digital assets rises, Fidelity Investments has advanced its position as a leader in digital assets. It offers its clients a diversification of their 401(k) retirement plan with Bitcoin. 

Also read: What does Rishi Sunak’s victory mean for crypto?

In 2021, Rest Super became the first retirement fund in Australia to offer its 1.9 million customers cryptocurrency allocation as a component of a diversified portfolio. Several other big players are noticing the development of the crypto space and want to participate in this booming sector. 

Bottom line

However, there are tragedies like the crash of Terra Luna or Celsius Network, which also make some asset managers skeptical. This is why Bitcoin, along with Ethereum, are the top two choices regarding long-term crypto investments, as they have been tested through time. 

They have always created a new all-time high level in a bullish cycle, and they are expected to do so in the next few years again. If that happens, Bitcoin could be worth more than $100,000, while Ethereum could jump somewhere between $5,000 and $10,000. 

Large asset managers already showed their interest in this sphere after they saw how fast people adapted to the idea of cryptocurrency investments. The number of money managers accepting crypto is likely to grow, but they will probably focus only on a few biggest cryptocurrencies.

I got into financial markets by accident in 2012 and started with Forex trading. Later in 2017, I started investing in stocks in cryptocurrencies and began writing articles profess...

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