Could Investors “HODLers” Reduce the Volatility of Bitcoin?

• Several studies agree on the influence that generation Z investors have on the current price of Bitcoin and predict that it will increase.
• These young people are more likely to invest in cryptocurrencies than those of previous generations.
• Male investors believe more in cryptocurrencies than females. In general, they are less prone to fears of falling.

Many have wondered why Bitcoin hasn’t fallen further despite the global uncertainty generated by Russia’s invasion of Ukraine. Part of the answer seems to lie in the work of HODLers, young crypto-loving retail investors who play for the long haul.

Contrary to other investors, this generation of players between 18 and 34 years old (millennial and centennial), belonging to Generation Z, do not seek immediate returns on their investments. They are the true fans of BTC, who consider digital money as belonging to their generation.

Some observed the crypto market considering that if this trend continues, the volatility of cryptocurrencies could decrease. The explanation is that these crypto investors are helping to provide a long-term floor for Bitcoin. Since the invasion of Ukraine, the cryptocurrency has managed to rise 5%.

Greater propensity to invest in crypto assets

According to a survey published by eToro, the global cryptocurrency trading platform, people between the ages of 18 and 34 are more likely to invest in digital assets compared to others. 66% of these contemporary youth and adults claimed to have investments in BTC and other virtual assets.

This figure represents an increase of 46% compared to July 2021, hid the study of the platform with millions of users. Among the most important findings of the survey is the fact that a third of crypto investors stated that they bet on the long-term value of cryptocurrencies as “a transformational asset class”.

According to eToro US investment analyst Callie Cox, these people are “HODLers in a nutshell.” The term HODLers came up years ago in an online forum. A shopkeeper mistakenly wrote it wanting to say “I’m waiting” and instead placed “I’m HODling.”

They aren’t afraid of sudden falls

"People who believe in the technology will be less likely to sell when the scary headlines come across the tape," Cox told Reuters. The expert believes that a greater volume of retail investors will take the opportunity to make future purchases in cryptocurrency falls. eToro’s survey based on data provided by 8,000 investors agrees with the results of other studies. Cryptocurrency exchange Currency.com found that 31% of its registered customers are people between the ages of 23 and 30. Another 20% are between 18 and 20. The average age of traders at Busha, another crypto exchange, ranges between 18 and 40 years old.

“I don't think crypto is a get-rich-quick thing. That's not the whole story,” said Larissa Bundziak, a 28-year-old Ukrainian who works in public relations in the United States. She recounts her own experience with Bitcoin. In January 2019 the price of the cryptocurrency fell to about $3,000 from $19,000, where it was at the time of buying at the end of 2017, but she did not panic. Instead, “she kept putting money in and all of a sudden it was $60,000.”

“It's about being able to send it how and when I want, to my family in Ukraine or wherever in the world, and that my money is not made by a bank or a third party where I don't know what's going on. Go ahead,” said the young investor who hopes to continue investing in crypto assets.

They aren’t afraid of sudden falls

Another sign of how new generations of investors are influencing the markets were the jumps made by “meme stocks” like GameStop (NYSE:GME). A large group of small investors colluded to inflate the market value of the video game retailer.

The eToro study also found notable differences between male and female investors. 38% of investors were men, while only 19% were women. Likewise, a survey conducted by Robinhood (NASDAQ:HOOD) showed some interesting data.

41% of female investors on the American investment platform confessed to never having invested in cryptocurrencies and added that they would never do so. While the male investors who said they did not invest in digital assets, they were only 24%.

On the Flipside

• The war in Ukraine would be inducing many Russian investors and millionaires to invest in Bitcoin given the impossibility of being able to mobilize their capital in Western currencies.
• We have to wait and see what the long-term effect of the increase in cryptocurrency reserves coming from HODLers and rich Russians will be.

Since the beginning of the Russian invasion, the price of Bitcoin fell to $34,000 (down 14%). But, during the development of the combats it has recovered 15% of its value. Will we have to expect the unexpected in the coming days or weeks? A black swan could be rearing its head and flapping its wings at any moment.

Not only Elon Musk and other whales have the power to play with the price of Bitcoin. Other market players such as Gen Z and Russian oligarchs could be brewing a revival of cryptocurrency and leave those who recently abandoned their positions speechless.

Why You Should Care

• Nobody knows exactly how much influence HODLers can have on the price of cryptocurrencies in the immediate future.
• What is irreversible is that they are ensuring the survival and momentum of crypto assets in the coming years. After all, they will be the ones who will take the reins of the economies around the world soon.

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