A joint report by FINRA and the CFA Institute revealed an alarming statistic: Approximately 19% of Gen Z investors are invested solely in crypto.
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That’s right, one in five investors under age 30 holds no assets other than extremely unpredictable cryptocurrency. This flies in the face of traditional investment wisdom, which recommends diversification of assets and only small positions of highly volatile ones. But is Gen Z onto something here that others aren’t seeing or is their investment strategy all hope and no fundamentals?
Crypto’s popularity reflects Gen Z’s investment attitudes at large, and a shift in fundamental beliefs about markets in general among younger investors. According to a Bank of America study, 94% of Gen Z and millennial investors expressed an interest in collectibles rather than traditional 60/40 stock/bond portfolios. The reason? According to the study, these younger investors believe that stocks and bonds “can’t deliver above-average returns.”
A psychologist could likely devote an entire semester’s worth of material to this statement. In a nutshell, it mirrors the fast-paced, “have-it-now” lifestyle of younger Americans, many of whom see standard institutions as untrustworthy and incapable of delivering rapid gains. With this type of mindset, crypto is in many ways the perfect asset. Its whole structure is decentralized and its high volatility plays to the needs and wants of the younger generations of investors.
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Before dismissing this nontraditional approach out of hand, it pays to look at the actual data. And in that sense, the younger generations may perhaps be onto something.
As an example, take a look at Bitcoin’s annual returns over the past 11 years, according to SlickCharts:
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2025 (YTD): 16.12%
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2024: 121.05%
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2023: 155.42%
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2022: -64.27%
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2021: 59.67%
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2020: 303.16%
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2019: 92.20%
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2018: -73.56%
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2017: 1,368.905
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2016: 123.83%
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2015: 34.47%
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2014: -29.99%
While there have been some significant down years, the boom years have been nothing short of fantastic. Overall, the world’s largest cryptocurrency has returned over 20,000,000% since 2011, according to Coinglass. Meanwhile, the Nasdaq and S&P 500 have returned roughly 541% and 245% over that same time period. In that sense, it’s perhaps not surprising that younger investors think the returns of the major stock market averages are pedestrian, to say the least.
The risks of investing in cryptocurrency — especially as a single asset — are extensive. Here are just some of the major ones, a handful of “tip of the iceberg” concerns regarding crypto. Here’s a quick look at each one in order.
If you put all your eggs in one basket, by definition, your portfolio becomes riskier. If you pick the wrong crypto, or if the whole system collapses, you could literally lose your entire bankroll in one fell swoop. This is not the foundation on which to build a long-term retirement savings plan.
Sure, if you’re already up 10,000% on crypto and its value drops 70% in a single year — as it has done on more than one occasion — you’re still up a significant amount. But if you’re just getting started and you lose 70% of your bankroll in a single year, you’ll need to earn 233% going forward just to break even. Many investors overlook how the math works in this scenario.
Although cryptocurrencies are gaining more mainstream acceptance every day, they still operate in the Wild West when it comes to regulation and oversight. As Thomson Reuters puts it, “No defined regulation is used to regulate cryptocurrency in the U.S. as of 2025.” This should give investors pause, especially those who are investing their entire bankrolls into cryptocurrency.
Bitcoin and its fellow cryptocurrencies only have value because investors buy them. They can’t be liquidated or exchanged for another asset and they don’t represent ownership in anything. Shares of stock, on the other hand, represent actual ownership of physical companies that produce revenues and profits. While their prices may rise and fall, they always have value unless the underlying company completely fails. With crypto, all it will take is an emotional stampede for the exits to render many coins worthless.
Publicly traded companies are required by law to disclose the state of their finances at least quarterly. This allows investors the opportunity to investigate exactly how well a company is performing. Cryptocurrency, on the other hand, has no reporting requirements and isn’t based on any financial fundamentals. Many investors scoop up coins without really understanding what they are buying, because little detailed information is actually available.
Cryptocurrencies like Bitcoin have certainly put naysayers in their place over the past decade, posting spectacular returns even in the face of uncomfortably high volatility. For this reason, many advisors actually recommend that their clients set aside a few percentage points of their portfolios in this aggressive asset class. But diving headfirst into crypto with your entire portfolio is playing with fire. Even with the huge returns Bitcoin has posted over the past decade, many crypto investors have still lost money. The bottom line is that a big bet on crypto is still an incredible speculation that could completely wipe you out. Even if you have an extremely high risk tolerance, proceed with caution.
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This article originally appeared on GOBankingRates.com: Almost 20% of Gen Z Investors Are Only in Crypto — Is That Brilliant or Dumb?
