It is important to pay attention to current cryptocurrency trends. Here we are halfway through the final quarter of the year, and we have already seen Bitcoin post a historically high exchange price. Two exchange-traded funds based on Bitcoin futures are now actively trading on Wall Street, and the first one to gain SEC approval posted a billion dollars worth of trading volume in just a few days after making its debut. Thus far in 2021, we have seen exciting cryptocurrency trends such as non-fungible tokens (NFTs) and decentralized finance (DeFi) projects make financial news headlines almost every week.
It seems as if each day this year has brought us closer to cryptocurrencies becoming mainstream, but we still have ways to go before this happens. There is no question that we are getting closer, but issues such as market volatility still need to be ironed out. Therefore, for the time being, it is essential that we look at trends that have developed this year with regard to crypto investing; this can give us some idea about the direction in which this economic sector could go in the near future.
Generation Z is Leading the Charge in Cryptocurrency Trends
According to a 2021 survey conducted by Money Morning, members of Generation Z are the most likely to be fully invested in cryptocurrencies, which is something that most financial planners would frown upon. It is not common to find young investors whose investment portfolios are more than 90% allocated to digital currencies, but this actually represents 6% of young investors.
What is somewhat surprising about the Money Morning survey is that most members of the Millennial Generation, many of whom were blindsided by the Great Recession and the global financial crisis, do not risk more than 10% of their investments in cryptocurrencies. Thus, although Millennials grew up with Bitcoin and tended to be even savvier than their younger peers about digital currencies, they are playing it safer.
Social Media Has Become a Classroom for Cryptocurrency Investors
Since about 2015, more than 50% of Americans have learned about current events and financial education through social networks. As can be expected, members of Generation Z almost exclusively learn about cryptocurrency investing on social media channels, particularly those that are centered on digital video content.
Now that crypto has a more formal presence on Wall Street, market analysts expect an explosion of online educational content related to investing in cryptocurrencies. Still, a lot of this content will be designed to steer investors towards ETFs. YouTube is becoming the prime destination for prospective crypto investors who wish to be introduced to this sector, and content creators are happy to oblige. Bitcoin ETF managers have a lot to gain with this trend; if they can clearly present the history of BTC and highlight the volatility of the markets, they will have an opportunity to present ETFs as the most sensible method to get into crypto.
Cryptocurrency ATMs Are Getting Second Chances
In October 2021, retail giant Walmart launched a pilot program that consisted of installing 200 automated teller machines that can instantly convert dollars into tokens. Users do not even need to have digital wallets in order to use these new Walmart ATMs; they can get a QR code that can later be used to set one up along with their newly acquired tokens. For this program, Walmart has partnered with CoinStar, a company better known for converting pennies and other coins into paper money for a fee.
An even more fascinating cryptocurrency ATM trend is centered on remittances made to El Salvador, the first country in the world to declare Bitcoin as legal tender. Financial regulators from that Central American nation are busy setting up 50 Bitcoin ATMs in 10 U.S. cities with a large concentration of migrant workers. The idea is to facilitate the process of sending BTC remittances at zero cost. Back home in El Salvador, relatives getting these remittances can also use ATMs to claim them. In the interest of full transparency, Salvadoran officials are making clear that these ATMs connect with digital wallets and cryptocurrency exchanges instead of banks.
More Traders Are Getting Into Cryptocurrency Options
Trading volumes in Bitcoin derivatives have been growing at a very fast pace, and they are hardly limited to BTC futures at the Chicago Mercantile Exchange. Instead, most of the action on cryptocurrency options takes place at established exchanges such as Binance. These risky instruments have been around since 2016, but their gradual expansion really picked up steam in 2021.
While some traders will tell you that cryptocurrency options can be effectively used as a hedging strategy, very few contracts are written for this purpose. Most BTC calls and puts are speculative, and this explains their growth. Since the cryptocurrency markets are still largely unregulated, we don’t know how many BTC options traders end up not exercising their contracts, thus losing their premiums. Although this trend suggests that the market is maturing, it also signals that many traders are willing to take on more risk.