Charles Schwab’s survey indicates that crypto is evolving from a fringe asset class to a portfolio staple.
Cryptocurrency has long been regarded as a speculative asset class with an uncertain future, often viewed with skepticism by traditional investors. However, as the industry evolves and more data emerges, it’s becoming increasingly clear that the tides are changing, and crypto isn’t going anywhere anytime soon.
No longer just fringe assets discussed in niche circles, cryptocurrencies are becoming a cornerstone of modern portfolios. But don’t just take my word for it. Financial giant Charles Schwab recently released findings from a survey that shed light on this growing trend, and the results are eye-opening. The survey clearly shows that crypto is becoming a sought-after asset, particularly among younger investors.
Image source: Getty Images.
Breaking down the Charles Schwab survey findings
The Charles Schwab survey reveals several fascinating trends about the rising interest in cryptocurrencies. Among the most telling statistics is that 62% of millennials expressed a desire for crypto exposure in their investment portfolios. This overwhelming majority underscores how digital assets resonate with younger investors who are more inclined to explore alternatives to traditional stocks and bonds.
Additionally, the survey showed that across all respondents (millennials, Gen Xers, and baby boomers), cryptocurrency ranked second in terms of assets respondents are most interested in owning. It’s an important shift, and crypto was second only to U.S stocks, which have long been a staple of investment portfolios, and ahead of other traditional investments like bonds, real estate, and commodities.
This suggests that the investing public is becoming more comfortable with the idea of cryptocurrencies as part of a diversified portfolio. The rising interest can likely be attributed to the fact that cryptocurrency is increasingly being viewed not only as a speculative asset but also as a potential hedge against inflation and economic instability due to their decentralized nature.
Overall, the survey paints a clear picture: Crypto is steadily integrating into the broader financial ecosystem, and as its acceptance grows, so too will demand. The preferences of younger investors are pivotal here, as they will be shaping the future of the financial markets in the years to come.
Which cryptos could lead the way?
Although Charles Schwab’s survey highlights the growing demand for cryptocurrency exposure, it does not provide a roadmap for which cryptocurrencies are best suited for growth. Investors must remain aware that while the upside potential is significant, cryptocurrencies are still risky and speculative. That said, there are clear frontrunners in the space.
Bitcoin
Bitcoin (BTC 0.54%) is the most obvious choice for investors looking to add a cryptocurrency to their portfolio. With characteristics that make it like “digital gold,” Bitcoin was the first cryptocurrency and remains the largest by market capitalization. Its decentralized design makes it an appealing asset in times of economic uncertainty, and it operates independently of central banks, governments, and traditional financial systems.
In addition, it has a finite supply capped at 21 million Bitcoins, which further bolsters its value proposition as a hedge against inflation, especially in a world where national debts are ballooning and fiat currencies are steadily being devalued.
Ethereum
Ethereum (ETH 0.25%) is another crypto heavyweight, and its potential may even surpass Bitcoin in certain aspects. While Bitcoin is primarily used as a store of value, Ethereum has revolutionized the blockchain landscape by introducing smart contracts — self-executing agreements with the terms written into code. This innovation has paved the way for decentralized finance (DeFi) applications, non-fungible tokens (NFTs), and the tokenization of other assets, all of which run on Ethereum’s blockchain.
Ethereum is positioned to remain the leading platform for decentralized applications, which could increase the value of its blockchain in the future. Ethereum’s utility as the backbone of this decentralized ecosystem makes it a solid long-term investment for those looking to capitalize on the evolution of blockchain technology.
Beyond Bitcoin and Ethereum
Although Bitcoin and Ethereum are the clear leaders in the crypto market, they are not the only opportunities for growth. For knowledgeable and confident investors, plenty of hidden gems could see significant appreciation as the cryptocurrency market matures.
DeFi tokens, for example, represent a new wave of financial innovation. Cryptocurrencies like Aave or Maker are integral protocols within the decentralized finance ecosystem, offering services such as lending and borrowing. As DeFi continues to disrupt traditional banking, these tokens could experience rapid growth.
Similarly, projects focused on even more nascent technology, such as AI and decentralized physical networks, could hold serious potential. Projects like Render or Helium lie on this frontier. However, it is important to recognize that beyond Bitcoin and Ethereum, risk increases by orders of magnitude as these cryptocurrencies are relatively unproven and still trying to find a fit in the market.
Zooming out a bit
Charles Schwab’s recent survey is a testament to the growing importance of cryptocurrency in modern investment portfolios. With millennials leading the charge and even traditional financial institutions beginning to embrace digital assets, the future of crypto looks brighter than ever.
Although the survey underscores the growing demand for cryptocurrency, it’s up to individual investors to determine which assets best align with their risk tolerance and long-term goals. Bitcoin and Ethereum remain the most established and widely adopted cryptocurrencies, but there are plenty of opportunities for those willing to venture into more speculative territory.
RJ Fulton has positions in Aave, Bitcoin, Ethereum, and Maker. The Motley Fool has positions in and recommends Aave, Bitcoin, Ethereum, Maker, and Render Token. The Motley Fool recommends Helium. The Motley Fool has a disclosure policy.
