Cryptocurrency exchanges have been failing, yet investor support for investing in crypto remains high, reaching a peak of $2.9 trillion in November of 2021. Unfortunately, this trend is putting younger generations at risk since digital currencies lack real value when not backed by an underlying asset. They are more like speculative securities, their value changing based solely on investor sentiment. Moreover, crypto is highly volatile, its price can plunge or surge depending on a single tweet.
Gen Z is the first generation to experience an age of technology and social media, which has led to the popularity of investment apps, facilitating trading with relatively small sums of money. Furthermore, their willingness to take on financial risk combined with the fear of missing out on lucrative opportunities, has caused many to overexpose themselves to digital currencies.
Ultimately, trading based on this trend will yield positive results only as long as digital currency remains popular. It can be likened to a costly game of musical chairs. Where will investors be when the music stops?
Lucas Feller, an Opinion Columnist from Glencoe, Illinois, has written about domestic and international politics and economics, as well as matters of constitutional law. He can be reached at lucasfel@umich.edu.
