Charlotte Principato, financial services analyst at Morning Consult, offers insight on why retail investors are staying the course when it comes to crypto investing despite the recent sell-off that saw Bitcoin fall below $30,000 a token.

Closing Bell

Retail Investors Staying the Course on Crypto Despite Growing Negative Trust

and as we've discussed regularly here on cheddar news and closing bell, both Bitcoin and ether trading at less than half of their all time highs back in november. But this is changing investor behavior. And what does the answer tell us about the future of the crypto world joining me now is charlotte principal Fallow, financial services analyst and morning consult charlotte. Thanks for coming on the show. We've had several crypto analysts on earlier in the year suggesting that digital assets could serve as a hedge against inflation. Well now we're seeing the crypto market move in tandem with the stock market. What clues does this offer on how investors are behaving? I think that's a really interesting question and I think what's what's gonna be most telling right now is how inflation continues because we, I think that it was a perfectly reasonable prediction to say that Bitcoin is a Cryptocurrency or a hedge against inflation or digital gold before inflation got as crazy as it is. I think right now it's really anyone's guess. But as consumers have less discretionary income as our economic data shows there is I think a likelihood that consumers pull back a little bit from investing more in Cryptocurrency. But our latest data shows that even within the past week with all of the craziness that we've seen in the crypto world, generally consumers are staying the course on their Bitcoin purchasing intentions and investments. And what I think is most encouraging is that it really is retail investors staying the course, the big fluctuations that we're seeing in Bitcoin's price specifically are really coming. I think from the whales or the institutional investors. And so I I for one I'm just really excited to see if there are retail investors that that hold onto this for the long term as it seems like they are. What is the sell off in the crypto market charlotte indicated about the overall confidence in the crypto market. I think that people are in a wait and see mode because these are unprecedented times. I think that for a lot of the institutional investors, they were just getting into the crypto space and now with the inflation that we're seeing and the volatility there perhaps having cold feet. But again, I think the retail investors, the fact that they're staying the course and showing us at least in our most recent data that they still intend to hold onto their Bitcoin or their Cryptocurrency and to potentially purchase it more in the future shows that there is still the cohort of investors that believe in Cryptocurrency as more than just a hedge against inflation as more than just digital gold. But really as a different, entirely different take on money and a decentralized form of finance. So there's sort of higher ideals that are behind Cryptocurrency when you take away the fact that people are just trying to make a quick buck, you know on Bitcoin. So I know according to your own survey, 21% of millennials say that they own Bitcoin, that's the highest of any demographic, any generation gen z is the second biggest owner of Bitcoin At 17% now we do know institutions according to your data are the ones who have been selling crypto of late. Would you say that these percentages likely holed up or could they have even grown as we've seen volatility in the crypto market. Unfortunately I don't think that we're going to see a big growth amongst millennials and gen Z because they are being so negatively impacted by inflation. And we also measure what's called financial well being, which is a consumers belief in really their how their finances are impacting their life and millennials and gen z unfortunately have very low financial well being, which means that this economic environment is impacting them more adversely so while I think while I have a lot of faith that millennial Bitcoin owners are going to hold on to their coins, I'm not super optimistic that they're going to increase their holdings or you know, buy this dip because I just don't think that they have the discretionary income when we're in this kind of inflationary environment. I mean you know who does they just don't have the extra money to invest more at this moment. Is this by the dip opportunity. Do you think that Bitcoin and other crypto assets will be higher six months from now. Well I can, it's really not even as important. What I think. What we also asked consumers that same question. What do they think the price of Bitcoin will be in six months the last time that we asked investors that question and the general public really was in the middle of April and consumers were very bullish on the price of Bitcoin, especially Bitcoin owners. They saw it at almost a high of what we've recorded so far of about $50,000, so it's certainly not bitcoins highest price ever. But as of the middle of April, consumers were very confident that Bitcoin's price was going to rise to about 50 over $50,000 within six months. And who knows, we could see that happen in less than six months ago. Bitcoin was at that level. So it's certainly possible. And again, I think it's really encouraging to see the optimism from Bitcoin owners specifically. Now, some people have said charlotte um some money managers that people should only invest in the crypto market what they're willing to lose entirely. Would you agree with that statement? Absolutely, I was prepared to say the same thing back to you. I think that that is the golden rule really, and but if you take that rule to be true and if you hope that investors act on that, then we do have to assume there will be less investing, maybe still people holding on to what they have. But as consumers have less in their pockets because again of this inflation there's going to be less to invest? All right, charlotte, Principato, financial services analyst at Morning Consul Charlotte, thanks so much for coming on the show.