In Crypto Investing, Turns Out it Really is OK, Boomer
It runs entirely counter to the prevailing narrative, but a new report from Bybit and consumer research company Toluna finds that Boomers are better at crypto investment than Gen X, Millennials and even Zoomers. Turns out a lot of the conventional wisdom and tools in traditional investment apply just as well to crypto investment, and Boomers are willing to put in the work. From Cointelegraph:
The report says that 34% of boomers spend “a few days” doing due diligence on a project before investing — 50% more than other generations. More concerning still, “64% of North American investors spend less than two hours or don’t DYOR at all.”
Boomers are also more likely to focus their research on technical factors such as tokenomics, revenue and competitor landscape. Compare this with their younger compatriots, who are more likely to prize reputational elements such as a charismatic founder and “website aesthetics.”
This shows that being a digital and crypto native is not as big an advantage as people think. It actually pales in comparison with some of the Warren Buffet-style skills that older investors have honed over the years.
Even though crypto has many idiosyncratic properties that differentiate it from other capital markets, it still has enough in common to allow for a decent crossover in analytic skills. After all, the price of digital assets is highly dependent on the balance of market supply and demand, just like traditional markets.
Digging into the technicals can prevent the kind of poor decision-making that led to large losses in 2022. Several times I have felt really good about buying a token based on the project’s white paper and the strong narrative pushing it but found, on further research, that there were so many venture capital unlocks incoming that the selling pressure would weigh on prices for years to come.
Boomers who are used to crunching company numbers and calculating price-to-earnings and price/earnings-to-growth ratios can apply these skills to data from CoinGecko or CoinMarketCap. Younger generations need to learn why “circulating supply” versus “max supply” is important and why volume is critical.
Indeed, crypto projects resembling traditional value investments have held up relatively well in the bear market. Investors have become savvier about the difference between protocols that issue tokens as a glorified fundraising method and those that produce revenue and share it with holders. So-called “real yield” crypto projects are not dissimilar to dividend-paying companies — something boomer investors would be familiar with and perhaps drive some of their investing decisions.
Traditional investing due diligence continues to set apart the men from the boys, just as it has done throughout history. As long as it does, boomers will outperform younger generations because they do more research and tend to be more patient when it comes to investing, which leads to higher returns than younger generations, who may jump into an investment without fully understanding what they’re getting into. If you’re looking for someone reliable and knowledgeable about due diligence, look no further than your parents or grandparents.