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Could “HODL” Investors Reduce the Volatility of Bitcoin?

  • Several studies agree on the influence that Gen Z investors have had and continue to have on the price of Bitcoin and, predict that it will increase.
  • Young people are more likely to invest in cryptocurrencies than those of previous generations.
  • More male investors believe in cryptocurrencies than female. In general, male investors seem less prone to fears of falling values.

Many have wondered why Bitcoin hasn’t fallen further despite the global uncertainty generated by Russia’s invasion of Ukraine. Part of the answer seems to lie in the actions of HODLers – young crypto-loving retail investors who are in it for the long haul.

Contrary to other, more typical types of investors, this generation of players are largely between 18 and 34 years old (millennial and centennial), belong to Generation Z, and do not seek immediate returns for their investments. They are true fans of BTC who consider digital money as a staple of their generation.

Some observe the crypto market with the view that, should this trend continue, then the volatility of cryptocurrencies could decrease. The explanation for these considerations are that these crypto investors help to provide a long-term floor for Bitcoin. Since the invasion of Ukraine, the cryptocurrency has managed to rise 5%.

Greater Propensity to Invest in Crypto Assets

According to a survey  published by eToro, the global cryptocurrency trading platform, users between the ages of 18 and 34 are more likely to invest in digital assets compared to others. 66% of these contemporary young adults claim to have investments in BTC and other virtual assets.

This figure represents an increase of 46% compared to July 2021, in a study of the platform with millions of users. Among the most important findings of the survey was the fact that a third of all crypto investors stated that they were betting on the long-term value of cryptocurrencies as “a transformational asset class.”

According to eToro U.S. investment analyst Callie Cox, these people are “HODLers in a nutshell.” The term “HODL” was born some years ago on an online forum where a shopkeeper mistakenly wrote it, having mean to say “I’m waiting,” but instead writing “I’m HODling.”

Unafraid of Sudden Falls

"People who believe in the technology will be less likely to sell when the scary headlines come across the tape," Cox told Reuters. The expert believes that a greater volume of retail investors will in fact take the opportunity to make future purchases in the event that a cryptocurrency falls.

eToro’s survey, based on data provided by 8,000 investors, aligns with the results of several other studies. Cryptocurrency exchange Currency.com found that 31% of its registered customers are people between the ages of 23 and 30, while a further 20% are between 18 and 20. The average age range of traders at Busha, another crypto exchange, is between 18 and 40 years old.

“I don't think crypto is a get-rich-quick thing. That's not the whole story,” said Larissa Bundziak, a 28-year-old Ukrainian who works in public relations in the United States.

She recounts her own experience with Bitcoin. In January 2019 the price of the leading cryptocurrency fell to about $3,000, down from $19,000, the same point it had been at her time of purchase at the end of 2017. But Bundziak did not panic, instead, she “kept putting money in and all of a sudden it was $60,000.”

“It's about being able to send it how and when I want, to my family in Ukraine or wherever in the world, and that my money is not made by a bank or a third party where I don't know what's going on. Go ahead,” explained the intrepid young investor who hopes to continue building her portfolio in crypto assets.

Male Dominated

Another sign of how new generations of investors have influenced the markets were the jumps made by “meme stocks” like GameStop, when a large group of small investors colluded to inflate the market value of the video game retailer.

The eToro study also found notable differences between male and female investors. 38% of respondent investors were men, while only 19% were women. Likewise, a survey conducted by Robinhood showed some interesting data:

41% of female investors on the American investment platform confessed to never having invested in cryptocurrencies, and added that they would never do so. On the other hand, of the male investors surveyed, only 24% indicated that they had not invested in digital assets.

On the Flipside

  • The war in Ukraine has the potential to induce many Russian investors and millionaires to invest in Bitcoin, given the lack of mobility options for their capital in Western currencies following restrictions.
  • Time will tell what the long-term effect of the increase in cryptocurrency reserves from HODLers and rich Russians will be.

At the beginning of Russia’s invasion, the price of Bitcoin dropped unceremoniously to $34,000, marking a decrease of 14%. But as the conflict has developed, the leading asset has recovered 15% of its value. Investors are on alert to expect the unexpected in the coming days and weeks, after all, a black swan could rear its head and flap its wings at any moment.

It’s not only Elon Musk and other whales that have the power to play with the price of Bitcoin. Other market players such as Gen Zers and Russian oligarchs could be brewing up their own revival of the cryptocurrency to fill the void left by those who recently abandoned their positions.

Why You Should Care

  • Nobody knows exactly how much influence HODLers will have on the price of cryptocurrencies in the immediate future.
  • On thing that is certain is that these investors are ensuring the survival and momentum of crypto assets for the coming years. After all, it will soon be they who take the reins of economies around the world.

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    This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed to be financial legal or tax advice. Trading Forex, cryptocurrencies, and CFDs poses a considerable risk of loss

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