Cryptoverse: Will you grow old with Bitcoin?

May 31 (Reuters) – If you thought cryptocurrency was just a teenager’s game, think again.

With more people than ever in the United States turning to cryptocurrencies to finance their retirement, it seems the recent market carnage is a stark reminder that this wild market is not for the fainthearted.

According to a survey published last week by crypto exchange KuCoin, around 27% of Americans aged 18-60 – nearly 50 million people – have owned or traded crypto in the past six months.

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According to the survey conducted at the end of March, 28% of those aged 50 and over bet on crypto as part of their early retirement plans.

Most popular when it comes to investing in crypto was that they saw it as the future of finance, didn’t want to miss a hot trend, and saw it as a way to diversify their portfolios. (See GRAPHIC)

Market turmoil in recent weeks has muted talk that bitcoin and other cryptocurrencies will gain mainstream acceptance and be included in retirement plans by 2022.

“If[investors]want crypto, they have to have a very small allocation of their portfolio and be prepared to lose it,” said Erik Knutzen, chief investment officer for multi-asset class strategies at Neuberger Berman.

“We do not recommend it to everyone.”

Indeed, bitcoin is trading around $30,000, down 60% from its November peak of $69,000. And the market meltdown means that many newcomers’ investments are in the deep red.

However, crypto investors and analysts are watching like hawks for any indication that bitcoin could bounce back.

Nikolaos Panigirtzoglou of JP Morgan and his global strategy team said last week that the crypto turmoil has so increased investor sentiment that some metrics signal “a good entry point for long-term investors.”

JP Morgan added that Bitcoin funds, including exchange-traded funds (ETFs), have seen the biggest outflow since May 2021, with the position proxy for Chicago Mercantile Exchange bitcoin futures approaching oversold territory.

Using a model based on the volatility ratio of bitcoin’s gold, the team estimates the “fair value” for bitcoin at $38,000.

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The KuCoin survey comes a week after the Fed’s survey of 11,000 adults found that 12% of Americans engaged in cryptocurrencies as investments last year.

He didn’t separate the participants by age, but found that almost half of those holding crypto for an investment had an annual income of $100,000 or more, while almost a third had an income of less than $50,000. Read more

If legacy investors are at the forefront of the new crypto, is there a rush to meet that demand from asset managers?

Fidelity Investments stirred things up in April when it announced that individuals would soon be allowed to put some of their retirement savings into Bitcoin through their 401(k) investment plans. Read more

“Fidelity always works and makes decisions with the utmost integrity, and demonstrates an unwavering commitment to our customers, including those saving for retirement,” a Fidelity spokesperson told Reuters.

But if the anecdotal evidence from an investor and asset manager summit hosted by Reuters in New York last week is any guide, the 401k crypto market may be on its own for a while.

The general consensus was that crypto is extremely volatile for retirement purposes. Unless you’re a sophisticated investor like a hedge fund or ready to swallow a big loss, it’s best to stay away.

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Reporting by Jamie McGeever; Editing by Pravin Char

Our Standards: Thomson Reuters Trust Principles.

The views expressed are those of the author. They do not reflect the views of Reuters News, which is committed to honesty, independence and freedom from bias in accordance with its Trust Principles.

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