Based on an analysis from Schwab and Grayscale Price, Bitcoin has become an increasingly desirable asset to hold for Millennials. It should come as no surprise that the investment needs of Millennials have changed as each generation sees the creation of new value in the market place. Baby Boomers took advantage of the success of Disney stock and the Microsoft/dot com explosion, but younger investors are looking in different places for new wealth, and that includes Bitcoin.
Note: This is not investment advice and should be viewed as educational content. We are not financial advisors and you should seek one out before making investment decisions.
The Schwab marketing report from December 2019, shows that it is not the case that Millennials or Gen X are as interested in investing in Disney. More and more, younger investors are putting their money into Bitcoin. That includes the Grayscale Bitcoin Trust, which is primarily a holding. That also means that many Bitcoin investors are not using the cryptocurrency, rather they are holding it for its value.
Below is the recent Schwab investment analysis that demonstrates the change in investment attitude in Millennials. As you can see, while Gen X and Baby Boomers hold more shares in Microsoft and Berkshire Hathaway, Millennials have different views. Included, is a shift from earlier generations investing in Disney stock, while Millennials prefer Bitcoin.
It is no longer a fringe group of “anti-establishment computer geeks” that invest in Bitcoin. The Grayscale fund was recently open to retail investors and for several months the measurement revealed the sentiment of institutional investors. One of the key take-aways was that an increasing amount of investors are ready to pay hefty premiums to the spot bitcoin price. The total investment in GBTC is now just lower at $2 billion. This is in comparison to $2.7 billion which came in during the summer peak of BTC prices
It is important to recognize that Millennials hold brokerage balances that are around five times lower than boomer portfolios. So, the shift of investment attitude might mean more than just a change in attitude. Investment shifts also demonstrate what the younger, less affluent collection of investors is interested in, and can afford. A significant holding is the Grayscale Bitcoin Trust.
While Gen X and Baby Boomers have Apple, Amazon, and Berkshire Hathaway at the top of their portfolio, Millennials put Tesla in their top 3 choices, while Amazon and Apple remain at the top of most investors generally.
Bitcoin is more than a “dot-com” bubble cryptocurrency and a search for new asset wealth is a necessary part of being a millennial investor. Bitcoin and other cryptocurrencies have established a new class of assets and created a new world of investors. BTC and similar competitor assets are filling a plethora of needs in the market.
Bitcoin has proved it has staying power because it is an incorruptible decentralized cryptocurrency that can be exchanged efficiently globally. Even JP Morgan is using Bitcoin’s famed blockchain technology to move money faster, demonstrating the mainstream value for the new asset. But Bitcoin’s value is encouraged by the fringe market, including those who once remained unbanked.
There is no denying that Bitcoin is volatile; in December 2018, BTC peaked at around $20,000 USD, which was followed by a sudden evening out. BTC then exploded again in July 2019 at around $14,000 USD.
And although Bitcoin was originally devised to work as digital cash, research shows that most are buying Bitcoin outright. Instead, as mentioned, currently, most BTC investors are “HODL’ing” their investment in offline storage or cold-wallets.
So despite what skeptics and detractors have to say, Bitcoin continues to prove its staying power. And, as a result of the fluctuations, Bitcoin can offer immediate gains from successful price speculation. Moreover, owning BTC may be a savvy hedge against future instability of other related markets and currencies.
Disney’s Value Today
Disney stock (NYSE:DIS) still remains a valuable asset, but along with every market outside of medical masks, its valuation has taken a real hit in the middle of 2020.
Some of this is the result of the Coronavirus. With Disney’s theme parks and studios currently closed, they are hemorrhaging losses. But that is not the only reason for Disney to see a steady decline in value over the past three years.
As of writing this article, Disney stock is down over 4%, while major competitors like Netflix have risen nearly 3.5%. That being said, Netflix still remains lower on the list of priorities, while Amazon and Apple take the forefront across the generations of investors.
Different Investors for Different Times: Netflix Stock vs. Disney Stock
There is no denying that Disney stock still has value, but when it comes to newer investors, their priorities and resources are different. We are also living in a different age, where cryptocurrencies are a viable reality because currencies like Bitcoin are built on a decentralized, open blockchain. Moreover, millennials view content differently and so naturally their consumer needs and investment values have shifted.
One major hit to Disney came from its competitor Netflix (NASDAQ: NFLX). In 2018, Netflix’s market cap briefly eclipsed Disney’s! While it didn’t last, it nevertheless demonstrates the fact that media content is now consumed via streaming. And despite the fact that Netflix returned to its familiar second place, the House of Mouse took this as a sign it was time to compete by offering its own direct-to-consumer streaming.
Disney stock and the effects of COVID-19
Disney has not been helped by the COVID-19 pandemic, as now virtually every aspect of society has moved toward streaming, a relatively new endeavor for the entertainment giant. The current climate of isolation has taken a negative effect on several aspects of Disney’s legacy businesses. The result is that Netflix’s market cap has again overtaken Disney’s at the time of this article.
Disney’s business model is built on the necessity of property rights, which relies on:
- Releases in movie theaters
- Licensing intellectual property and merchandise makers
- Creating related experiences at the theme parks.
There is also a cruise line and TV show distributed to add to its media network content. The current environment of Coronavirus means that most of this is not possible. So with such enormous overhead and so little income, Disney is experiencing some major growing pains -if we can call it that.
Netflix, on the other hand, has built a far simpler model. Even while production is slowed, the bulk of their revenue is in subscriptions. Slowed production in 2020 might actually lead to higher cash flow for Nextflix, according to Evercore
Shifts in investment priorities from such major stocks like Microsoft, Disney, and Facebook are evidence of a few things. To begin with, Millennials still have much less investing power than older generations. So they will have priorities relative to their means. Basically, Millennials cannot afford the most valuable stocks. They more likely going to put their investments where they are able.
More than that, Millennials live in a much more globally connected world than older generations. That means that they value connectivity, and Bitcoin and other strong cryptocurrencies do just that.
Another factor to consider is risk tolerance. The basic rule is the more you can stand to risk, the more you might gain. Bitcoin continues to prove that rule to its holders. There are times when it will hit a bear, but then BTC comes back with a bull.
- Conservative investors typically go for bonds, GICs, and market funds. These are considered the safest investments, which means that they usually are long-term investments with lower yields.
- Moderate investors may prefer potential shorter-term gains from stocks and bonds.
- Aggressive investors will be more open to putting money in unpredictable markets.
This is not likely the end for Disney. In fact, many view it as the right time to get in during the dip. Given the recent low of Disney stock, many investors are seriously considering unloading some of their losses.
Disney stock rebounded post-war, offering people reprieve from troubling times. These days, it may be Netflix that is offering viewers solace in a time of mass isolation. But if I had to guess, I would wager that Disney will adjust to the times. They have shown in the past they know-how. Pixar is a past coup, and one of the many ways that Disney has proven its staying power.
The problem remains for millennials: it is more difficult to break into an already overloaded market. That is where companies like Netflix and outliers like Bitcoin were able to make their way into the mainstream market. They also demonstrate the needs and wants of our current market. A lot of market value is shifting to digital assets and content. There is a good reason for that.
Since 2008, Bitcoin has established a global network that shows no signs of slowing. With more than 9,300 nodes spread over the globe and no downtime, the network is capable of carrying vast transactional value. This is impressive because it also bypasses banking fees or limitations, as third parties are not necessary for people to transact peer to peer using the Bitcoin Network. There are still hurdles for Bitcoin to overcome. It was created as digital cash, but due to scalability issues, as well as its growing popularity, it is now mostly held in the way many traditional assets are.
There is no doubt that Bitcoin’s volatility may scare a few off. But the younger generation now has a wildly different perspective than their older counterparts. They have just seen oil prices go negative and stock markets artificially bloom amidst a global economic breakdown, things never before imagined.
Volatility is a feature of Bitcoin, and Millennials and those generations following them are learning that the openly tracked volatility of Bitcoin may be preferable to the misunderstood and highly manipulated traditional markets.