New data from a survey conducted by social and multi-asset investment platform eToro shows that 40 percent of millennials will favor crypto in case of recession, according to a press release published Sept. 10.
The investment platform conducted a survey between July 18 and July 31 among 1,000 online investors based in the world’s most powerful country, the United States. The respondents, aged between 20 and 65, showed the variation of investment choices between Generation Z, millennials, and Generation X.
The survey discovered that more than 67 percent of American investors fear recession, and may not hesitate to convert a certain percentage of their stock portfolios to safer investments or turn to crypto, real estate, or commodities for hedging.
Millennials will turn to crypto
Millennials, born between 1980 and 1984, said they will turn to crypto in the event of recession while half of Generation Z – those born in 1995 or later – prefer to invest in real estate.
As for Generation X, those born between 1965 and 1979, 38 percent of them said they would turn to commodities.
eToro US Managing Director Guy Hirsch explained that the escalating geopolitical tensions are causing investors to seek a safety net outside the traditional stock market.
“As global markets experience heightened volatility and as geopolitical tensions escalate, investors are seeking stability outside of the traditional stock market. Investors across all demographics are looking to empower themselves financially by diversifying their portfolio with new asset classes and exploring novel forms of ownership,” said Hirsch.
Americans have become increasingly worried that a recession is coming within the next year due to concerns of US President’s trade war with China, according to Business Insider.
A poll conducted by ABC News/Washington Post revealed that 60 percent of Americans think the country will likely be in recession in the coming year.
Trump hit back on Twitter, calling it a fake poll.
According to award-winning economist Lou Crandall, the chief economist for Wrightson ICAP, there is no reason for the US economy to be in recession in the next year or two. However, political risks will still plunge the US into recession, according to the economist.
He highlighted that recessions are hard to predict. He further pointed out that some of the requirements for a recession – inventory overhand or tight monetary policy – are not in the picture.
Fractional ownership on the spotlight
A recession will likely push investors to gamble with fractional ownership and new asset classes as traditional investment vehicles will not be able to shield their investments from the effects of the looming economic meltdown.
92 percent of those concerned about the possibility of a recession say they would own fractions of private startups, famous artworks, and landmark buildings. 55 percent of the respondents said they would sell a part of their stock portfolio to fund investments in fractional ownership.
Hirsch added that investors are in favor of more financial freedom that the current financial system does not allow, and this would go a long way in engaging younger investors.
“We believe that if a recession were to occur, we’d see shrinking stock portfolios and growth in other asset classes like crypto, as well as new fractional ownership models,” said Hirsch.
Innovation is playing a huge role in expanding investment opportunities from accredited investors only to retail investors.
“Historically, these investment opportunities have been limited to high net worth and institutional investors, but innovation is unlocking these opportunities for everyday investors and clearly, these results indicate that the demand is there,” explained Hirsch.