eToro Survey: Over 70% of Millennials to Invest in Crypto if Offered by Institutions

Giant social trading platform, eToro has released the results of its market survey - which shows that over 40% of “millennial online traders” appear to have “less faith” in the performance of the traditional stock market - when compared to the digital asset market.

Significantly, 71% of millennials (born between 1981 and 1996) responding to eToro’s survey said they “would invest in crypto if it was offered by traditional financial institutions.” Other notable results from the trading firm’s poll included “half of online investors expressing interest in a crypto allocation in their 401k plans.” In the US, a 401(k) is a retirement savings plan that is “sponsored by an employer.” The plan “lets workers save and invest a piece of their paycheck before taxes are taken out.”

As explained in eToro’s press release, the company’s “nationwide survey of 1,000 online traders” revealed that 77% of Generation X respondents (those born between early-to-mid 1960s and early 1980s) “trust stock exchanges more” than cryptoasset-related investments or other alternative/emerging markets.

Losing Trust In Traditional Financial System

Commenting on the results of the survey, Guy Hirsch, eToro’s managing director, remarked:

We're seeing the beginning of a generational shift in trust from traditional stock exchanges to crypto exchanges. At the heart of this change are the asset classes themselves. Younger investors' experience with the stock market has seen a great deal of loss of trust, with the fall of Lehman Brothers because of irresponsible practices followed by the worst recession since the Great Depression.

Hirsch, a former director of innovation strategy at Samsung SDS, added that Americans also began to lose trust in the traditional financial system when they saw “their savings evaporate” - as banks received “free money through quantitative easing while their cost of living continued to rise.”

Going on to express confidence in the “immutability” feature of blockchains, Hirsch explained that distributed ledger technology (DLT)-based systems allow firms to conduct “real-time auditing” in a “cost-effective” manner. According to Hirsch, this is “why millennial and generation x” believe digital asset exchanges are “less likely to be subject to manipulation and less likely to be a place where bad actors get rewarded with taxpayer money.”

Other findings from eToro’s survey suggested that younger investors trusted crypto investments more than traditional stocks. Notably, eToro’s nationwide poll of US-based investors found that “even among millennials that [said they] don't trade crypto, one-third said they would trust crypto over the stock market.”

Over 90% Of Milllennial Traders Would Invest In Crypto If Offered By Large Institutions

Most, or 93%, of millennial crypto traders responding to eToro’s survey said “they would invest more money in [digital assets] if [they] were offered by traditional financial institutions such as TD Ameritrade, Fidelity, or Charles Schwab.” Approximately 70% of millennials participating in eToro’s poll that were not trading crypto said they would start if more institutions began providing the option to invest in digital assets.

Nearly 60% of investors from all age groups that took part in eToro’s survey said “they would invest more money in crypto if it were offered by a traditional financial institution.”

How Bakkt Can Bring the Crypto Space an Institutional Investor Influx

Cryptocurrency enthusiasts have for years been waiting for institutional investors to enter the space. While the introduction of bitcoin futures contracts on regulated exchanges in late 2017 didn’t gain a lot of traction, but Bakkt may.

Bakkt is a long-awaited bitcoin futures exchange and on-boarding platform from the Intercontinental Exchange (ICE) - the parent company of the New York Stock Exchange – and it’s set to launch this year. Bakkt itself has remained tight-lipped over the precise launch date after delaying its launch last year, with ICE CEO Jeff Sprecher in February simply saying “later this year.”

It’s possible that this quarter may see the launch or at least more news about when the exchange is finally coming. At the end of March, Bakkt CEO Kelly Loeffler explained:

While we’re not yet able to provide a launch date, we’re making solid progress in bringing the first physical delivery price discovery contracts for bitcoin to the U.S.

Bakkt’s launch could be a major milestone for the cryptoasset industry. A venture backed by Microsoft and Starbucks, its institutional pedigree alone will switch many cautious investors on. Specifically, the firm is set to help consumers pay for goods and services with cryptocurrencies, with Starbucks being the flagship retailer in its arsenal.

Bakkt’s Bitcoin futures contracts will be the first physically-settled derivatives on a regulated trading platform. This means investors will receive the contract’s underlying asset, bitcoin, when it expires.

Currently the Chicago Mercantile Exchange (CME) offers cash-settled bitcoin futures contracts, meaning investors get the equivalent of BTC’s value in fiat when the contracts expire. This is seen by some as a major development in the cryptocurrency space, as it shows traditional finance is willing to interact with the nascent cryptoasset industry.

It’s worth noting that earlier this year the ICE’s CEO called Bakkt a “bit of a moonshot bet,”  as it was organized in a way “very different than the way ICE typically does business.” The firm has its own offices and management team, and could undergo more rounds of financing in the future.

Bakkt And a Potential Bitcoin ETF

What’s significant about Bakkt’s launch beyond this, is that it may bolster the chances of a Bitcoin Exchange-Traded fund (ETF) being approved. Such a product would make it easier for institutional investors to gain exposure to cryptocurrencies.

In August, the US Securities and Exchange Commission (SEC) rejected nine other ETF applications, in particular highlighting how those applying hadn’t provided evidence that “bitcoin futures markets are of significant size’” for an ETF to be launched.

Once Bakkt is launched its trading volumes may very well help quell the SEC’s concerns over the bitcoin futures markets’ small size as institutions and other investors may feel comfortable entering it. Larger futures contracts trading volume, increased liquidity and a well-established company involved may prove enough to convince the SEC that the time is right for a Bitcoin ETF.

Bakkt therefore represents a very significant milestone for a maturing cryptoasset industry and may well herald the “institutional influx” that many have been anticipating since 2017. Despite the markets remaining relatively flat throughout 2019 these looming decisions in the U.S. have the power to move the entire industry forward, for better or worse.