The crypto industry attracts investors from various age groups, including retirees and teenagers, all expressing interest in the market. However, a recent report revealed that Generation Z crypto investors tend to incline more toward copy trading or social trading.
What is Copy Trading?
Copy trading, also known as social trading, is an investment approach where an individual replicates the trades executed by another investor. This method is available not only in the cryptocurrency market but also in traditional stocks. In the crypto industry, various exchanges provide copy trading services to their users. Users have the option to employ an automated tool. This duplicates positions that are opened and managed by a selected individual.
According to Bitget’s report on copy trading, about 44% of their copy traders were under 25 years old. The next largest group was individuals aged 25 to 35, accounting for just under one-third of all copy traders. Individuals aged between 35 and 55 comprised 17% of the copy traders, whereas those above the age of 55 constituted just 7% of the total.
The report read,
“The younger generation, particularly Gen Z, displays a greater interest in innovation and a propensity to share experiences with peers on social media platforms, potentially explaining their inclination towards adopting copy-trading strategies. Moreover, young individuals often seek out social media influencers who serve as role models in lifestyle, knowledge, and investment decisions.“
On the contrary, the same group touts their parents as bad role models with regard to finances according to a recent report by Experian. The survey revealed that about 57% of millennials and Gen Z participants acknowledged struggling to resist impulse purchases. Over 60% indicated a preference for spending money on immediate life experiences rather than saving for retirement. A significant portion of this group attributed this behavior to their parents. About one-third stated that their parents did not educate them about personal finances. A few others reported that their parents avoided discussing money matters entirely.
Also Read: Crypto Volume on Exchanges Dropped 12% to $2.6 Trillion
Gen Z and Crypto
Additionally, a report by the CFA Institute and the FINRA Foundation, cryptocurrency emerged as the most favored investment among Gen Z. The report indicated that they are drawn to investing due to the widespread availability of financial information on social media. Furthermore, the ease of investing small amounts through apps tailored to this particular generation. This is further fueled by the growing popularity of cryptocurrencies and the fear of missing out [FOMO] on potentially lucrative opportunities.
The report disclosed that YouTube stands out as a primary platform where Gen Z investors seek to learn about financial subjects and investors. The platform hosts a multitude of financial and crypto influencers.
Where are Gen Z investors getting their money from?
An Experian study indicates that over 50% of Gen Z and millennials rely to some extent on financial support from their families. In contrast, only 28% of millennials and Gen Z respondents stated that they do not depend on their family’s money at all.