The effects of the coronavirus on the global economy are not really foreseeable at present, but stock markets have already panicked in the meantime. Interestingly, younger investors are apparently using the price falls to increase their portfolios.
What do the traditional stock markets and the price developments of Bitcoin and Co. have in common? Well, at least to the incalculable risk of the economic consequences of the corona virus, they reacted with significant losses at the end of last week, the DAX and Dow Jones went down by a good 10 percent and Bitcoin (BTC) also dropped significantly. The really exciting thing, however, is how differently different investor groups interpret the situation and implement their findings strategically. A US analysis shows: The younger generation, the so-called milleniums, see the price falls as an opportunity to buy shares. Institutional investors, on the other hand, tend not to stay and buy.
Investment strategy of the millennium: risk mentality or recklessness?
The fresh insights into what is happening from an investor’s perspective are based on two sources of information: Traditional financial institutions such as Citigroup currently recommend their institutional clients not to buy into it because further developments in the coronavirus issue are not foreseeable. Such recommendations are becoming public. FinTech companies have been known to publish details of what is currently going on on their trading platforms, and some of this information has now become public again. For example, the young investors bought shares in Apple at the exact time when Apple’s share price fell significantly. It is quite possible that they also switched assets from Bitcoin (BTC) and thus pushed up the losses at BTC. In any case, the daily turnover of FinTech platforms, which have predominantly young customers, clearly increased.
We had already reported on this in detail last spring: Crypto investors are generally very active in day-to-day operations. And millennium investors are also mainly involved in the crypto market. At present, increases in daily volume can be observed on the major crypto exchanges, although this is probably also connected with the massive price fluctuations. Nevertheless, one thing remains to be said: while institutional investors apparently want to wait it out and refrain from making acquisitions, younger private investors see opportunities. It remains to be seen which stock is right in the long run.
Bottom line: HODL or FOMO?
One could also describe the overall picture with HODL for institutional investors and FOMO for the millennium. One thing is clear: the corona virus will keep the markets in suspense for even longer and could once again cause unusually high price fluctuations. But you have to decide on your own strategy in such times.