As a millennial, this is hard to say, but boomers are getting a better understanding of cryptocurrency. They are taking research methods used in traditional markets and applying them to crypto projects, according to a new report from Bybit and consumer research firm Toluna.
The study notes that 34% of boomers spend “a few days” doing due diligence on a project before investing, 50% more than other generations. More worrisome still, “64% of North American investors spend less than two hours or do no personal research at all.”
Boomers are also more likely to focus their research on technical factors like tokenomics, revenue, and the competitive landscape. Compare yourself to your younger compatriots, who are more likely to value reputation elements like a charismatic founder and “website aesthetics.”
This goes to show that being a digital and crypto native is not as big of an advantage as people think. In fact, it pales in comparison to some of the Warren Buffet-esque skills that more veteran investors have honed over the years.
Perhaps boomers are more likely to be retired and therefore have more free time than younger generations. It’s hard to say, but it seems that the best way for young people is to be humble and learn from the old.
Although cryptocurrencies have many idiosyncratic properties that set them apart from other capital markets, they still have enough in common to allow for a decent crossover of analytical skills. After all, the price of digital assets largely depends on the balance between market supply and demand, just like traditional markets.
Digging into the technicalities can prevent the kind of wrong decisions that led to big losses in 2022. On several occasions I have felt great about buying a token based on the white paper for the project and the strong narrative behind it, but by doing more research I found out in depth that there were so many VC unlocks on the way that selling pressure would weigh on prices for years to come.
Boomers who are used to doing company records and calculating price-earnings and price-earnings-growth ratios can apply these skills to data from CoinGecko or CoinMarketCap. Younger generations need to learn why “circulating supply” vs. “peak supply” is important and why volume is critical.
In fact, crypto projects that resemble traditional value investments have held up relatively well in the bear market. Investors are increasingly aware of the difference between protocols that issue tokens as a glorified method of fundraising and those that produce revenue and share it with holders. So-called “real returns” crypto projects are not much different from dividend-paying companies, something baby boomers would be familiar with and may have driven some of their investment decisions.
This is not to ignore the importance of narrative and community in modern investing, and especially cryptocurrency. For example, decentralized perpetual futures trading platforms such as GMX, Gains, and ApeX Pro benefited from the decentralization-friendly sentiment following the FTX bankruptcy.
Investigating this aspect requires a good knowledge of social media, especially Twitter, which is one of the main avenues of access to well-known analysts, founders, and enthusiasts in the crypto space. Investors use these tools to find narratives, assess where a project is in the life cycle, and gauge broader market sentiment.
But millennials and Gen Z don’t really have an advantage when it comes to using social media to gauge trends, because it’s not something new anymore. It’s Web 2.0, and everyone already knows how to use social media. In fact, young people turn their familiarity with social media to their disadvantage by overvaluing it as a research tool, while boomers are more likely to stick to the facts.
Due diligence in traditional investing continues to differentiate the men from the boys, as it has throughout history. As long as this is the case, boomers will outperform younger generations because they do more research and tend to be more patient when it comes to investing, which translates into higher returns than younger generations, who can jump into investing without fully understanding what are they getting themselves into. If you are looking for someone trustworthy and knowledgeable about due diligence, look no further than your parents or grandparents.
nathan thompson is Bybit’s lead technical writer. He spent 10 years as a freelance journalist, mainly covering Southeast Asia, before turning to cryptocurrency during the COVID-19 lockdowns. He has a degree in Communication and Philosophy from Cardiff University. He has a degree in Communication and Philosophy from Cardiff University.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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