Cryptocurrency Investments: Are They a Wise Move for Those New to the Stock Market?

It’s no secret that cryptocurrency investments are on the rise. The market itself appreciated more than 1,200% in 2017 and if recent months are any indication, this trend doesn’t appear to be slowing down anytime soon. For those experienced in the stock market sector, buying and trading digital currency might not feel too different from other transactions that occur over the virtual realm. Yet, for others who aren’t used to working within the sphere, the thrill of investing in cryptocurrencies like Bitcoin can leave them biting off more than they can chew.

One demographic especially impacted by the allure of cryptocurrency: college students. As most have not entered the full-time job sector yet, this is historically a group that’s not exactly known for having a lucrative flow of disposable income. Still, that hasn’t kept young 20-somethings from trying their hand and making a go at it. In fact, according to a survey of 1,000 college students conducted titled the Student Loan Study, 21.2% of students confirmed that they had used their student loan money to invest in cryptocurrency. While this statistic might be a little unexpected, it’s not surprising considering that today’s average college student is around 24 years old. More over, 60% are borrowing money from some source or another to fund their studies.

This Millennial generation is the most sophisticated, informed and computer literate one to date, so when it comes to technology, there’s very little that gets past it. They use their computers and smartphones to research everything from the best mattresses and where to go eat, and even access automated investment management tools via mobile platforms. Thus, when cryptocurrency steadily rose in the ranks from a niche investment platform into a legitimate financial tool, it’s expected that tech-savvy college kids in their dorm rooms are the ideal target audience: in a position to solve the complex algorithms required to access the funds, with a need for fast funds. While the payout isn’t as quick as other resources, such as a same-day payday loan, it does offer the hope of an windfall in the not-so-distant future.  

This report comes on the heels of another study conducted in 2016 which revealed that Millennials are participating less frequently in traditional investment avenues such as the stock market. The report speculated that around one in three, or 31% of the demographic is involved in such pursuits. Compare this to the fact that 51% of Generation Xers (aged 38 to 53) trade on the stock market and 48% of Baby Boomers (aged 54 to 75) do. One reason why the younger generation has been so hesitant to go this route? Many speculate that the 2008 financial crisis has more than a little to do with it. Backlash against major financial institutions might be an echo now, but it still rings clear for many, even those who weren’t directly impacted by it at the time.

Considering that most students today will be paying on student loans until well into their 40s, it only makes sense that cryptocurrency, as volatile as it might be, is exciting and intriguing to this sector. It’s new, fresh, and offers an alternative to the traditional markets that they’ve watched dip and fall in the past. When the crypto market is on the rise, it’s a promising investment avenue that could offset some of the financial strain that college creates. If values drop, however, it could mean even later nights spent cramming and stressing.