What role will cryptocurrencies play in retirement strategies | The Financial Express

What role will cryptocurrencies play in retirement strategies

Reportedly, cryptocurrencies such as Bitcoin and Ether have started to make way into young investors’ retirement plans

What role will cryptocurrencies play in retirement strategies
According to Congressional Research Service, a public policy research institute, financial services company Fidelity Investments will allow users to allocate 20% of their retirement savings to Bitcoin-backed investments through their 401(k) retirement plans

Insights from serverals surveys have shown that millennials and Generation Z have begun to increase investment in cryptocurrencies. It is believed that cryptocurrencies such as Bitcoin and Ether have started to make way into young investors’ retirement plans. As per a survey by Capitalize, an individual retirement account (IRA) rollover service, 56% of GenZ individuals and 54% of millennials spoke about the inclusion of cryptocurrencies or non-fungible tokens (NFTs) in their retirement strategy to gain post-retirement benefits. “As the retiring early principle has become prevalent, millennials and GenZs are expected to accumulate cryptocurrencies to get benefits through dividends and price appreciation. Through this plan, young investors will be able to get good returns on their investments as they’ll be able to invest for the long-term, and even bear the effects of price falling down if there are bear market-oriented developments,” Aliasgar Merchant, lead developer relations, Akash Network, a decentralised cloud platform, told FE Blockchain.

Experts are of the opinion that Bitcoin has made developments as an asset class to become more than a digital currency, as users can utilise it not just as a medium of exchange but also as a value storage alternative and collateral against inflationary effects. Around 27% of Americans, aged between 18-60 years, have owned or traded in cryptocurrencies in a period of half a year, as revealed by a research of KuCoin, a cryptocurrency exchange. “The appropriate way to judge digital assets is through utility and use cases, which are currently present in the market. Since digital assets have been through improvisations and transformations over the years, they remain susceptible to volatility and fluctuations. However, experts still suggest that one can invest small portions of their net worth in cryptocurrencies. As young people can take their time with such investments, they’ll be able to bear the associated risks,” Punit Agarwal, founder and CEO, KoinX, a cryptocurrency taxation startup, stated.

Moreover, reports have stated that apart from retail investors, wealth management firms have started to add cryptocurrencies to their retirement plans in consideration of employee-related factors such as age, disposable income, risk-endurance ability, among others. According to Congressional Research Service, a public policy research institute, financial services company Fidelity Investments will allow users to allocate 20% of their retirement savings to Bitcoin-backed investments through their 401(k) retirement plans, which are employer-sponsored retirement plans to allow eligible employees make contributions. “Cryptocurrencies carry the potential to provide users’ protection in case if one’s country goes bankrupt or its fiat currency loses purchasing power from a global perspective. Investments in Bitcoin and Ethereum can bring stability, and are widely used in the market. I believe Web3.0-based investors will gain advantages through it,” Amanjot Malhotra, country head- India, Bitay, a cryptocurrency exchange, said.

Also Read: SEC to address growing crypto issuer filings

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