Did The 'Betting Problem' Of Young Investors Help The Bitcoin Surge Last Week?

Behind the surge of Bitcoin beyond $100,000, aside from Trump's supportive tendency for cryptocurrency, are there any significant shifts in investment psychological trends that people might easily overlook?

The answer might be yes: An increasing number of young American investors are becoming more willing to hold a large amount of high-risk, high-volatility investments!

Despite financial professionals often warning against such actions, the reality is that they have indeed made a lot of money this year...

An interesting set of data is as follows: A portfolio holding an equal amount of Bitcoin, gold, meme stock GameStop, and sports betting stock DraftKings has achieved a return rate of 62% in the first 11 months of this year. According to the financial company Leuthold Group, this is more than three times the return rate of the traditional 60/40 stock-bond portfolio—although the U.S. stock market has risen by about 27% this year, which is already quite good, it still pales in comparison to the return rate of these high-risk targets...

Financial education company Noyack's survey data shows that many young American investors say they are currently trying to lay the foundation for achieving traditional goals (such as saving for retirement or buying a house). To this end, they do not hesitate to make high-risk bets.

With the popularity of smartphone trading and online forums for retail investors in recent years, speculative investment has also become a form of entertainment. Many winners are showing off huge profits online, profits that were once out of reach for ordinary people, especially for young people who constantly complain about not being able to make ends meet after the pandemic's high inflation.

Young men are the most gambling-loving

Dan Cassino, a professor at Fairleigh Dickinson University, found that men's gender attitudes can predict whether they hold cryptocurrencies and meme stocks—those young men who claim to value masculinity very much but feel they are not masculine enough in traditional terms have the highest proportion of holding cryptocurrencies and meme stocks.

A report from the Pew Research Center in October also shows that about 42% of men aged 18 to 29 invest in or use cryptocurrencies, while the proportion of women in this age group is only 17%. The financial education company Gold IRA Guide found that nearly 11% of men aged 25 to 34 own gold and silver, while this proportion is only 6.5% of the total U.S. population.

Last week, the price of Bitcoin broke through $100,000 for the first time, partly because people expected the Trump administration, which will take office in January next year, to be more friendly to cryptocurrencies. At the same time, political speculation has also become a speculative investment in recent years. American investors spent $166 million on the Kalshi platform this year, betting on who will win the U.S. election. The company won a court ruling in October last year, allowing legal political event contract trading within the United States.

According to Kalshi's statistics, about 85% of Kalshi users are male, and nearly half of the users are under 30 years old.

Data from the Pew Research Center also shows that users on YouTube and Reddit are mainly male and under 30 years old. They have become a market force, driving the stock price of GameStop to rise in 2021.

The JPMorgan Chase Institute also found in October that men and young investors are more likely to buy when the market falls sharply or chase high in a market environment similar to the current rise.

Why More People Want To 'Take Chances' At Capital Market?

So, why are young American investors, especially men, becoming more and more eager to invest in high-risk investments like Bitcoin?

Some male investors say they have no choice but to roll the dice in a world they think is disadvantageous to them: the labor force participation rate of young men is declining, while that of women of the same age is rising. At the same time, the college enrollment rate of men is also decreasing.

Although men earn more in the workplace than women, they are more likely to be promoted to senior management positions. However, according to data from the American Life Survey Center, a subsidiary of the American Enterprise Institute, about 45% of young men said they faced gender discrimination in 2023, a proportion that was less than one-third in 2019.

The pandemic economy of 2020 and 2021 also provided a breeding ground for people with this view. Economic stimulus checks and reduced spending left more money in people's bank accounts. Commission-free brokerage companies like Robinhood have become more and more popular. The market first plummeted, then soared, and those who bought when others avoided were rewarded.

Data from Broadridge shows that as more Americans enter the retail investment field, investors have become younger, more male, and less wealthy over the past five years. According to Cassino's research, about 10% of American men aged 18 to 29 have a problem with speculative betting, while the proportion in the total U.S. population is only 2.5%.