With the price of Bitcoin (BTC -1.50%) touching new highs and the return of meme coin mania, it's perhaps no surprise that a greater number of people than ever before are planning to buy crypto. According to The Motley Fool Ascent's 2024 Cryptocurrency Investor Trends Survey, a record 43% of respondents said they were either "likely" or "very likely" to invest in crypto this year.
With all of this new money flowing into crypto, the natural assumption is that crypto prices will push even higher and Bitcoin will continue to set new all-time highs. But is that really the case? There are two warning signs within the survey data that suggest the impact may not be as great as most people think.
Will the new Bitcoin ETFs attract new investors?
While the new spot Bitcoin exchange-traded funds (ETFs) have been successful by just about every important metric, there's one area where they haven't had a real impact -- attracting new, first-time investors to crypto. Within The Motley Fool Ascent's 2024 Cryptocurrency Investor Trends Survey, it's possible to break down the data according to people who have previously owned crypto and people who have never owned it -- and that's where the first warning sign occurs.
Yes, people who have already owned crypto are more likely to buy crypto this year. But what about the people who have never owned crypto? Only 3% say they are "very likely" to buy crypto, and only 13% say they are "somewhat likely" to buy crypto.
That means more than 80% are still "unlikely" to buy crypto this year. Unless Wall Street steps up the marketing for the new spot Bitcoin ETFs, they may never attract these investors due to all the lingering questions and issues still hovering around crypto.
Crypto's demographic divide
Moreover, crypto seems to be having a difficult time widening its demographic profile. Simply put, the people who tend to buy it are young men. There's a reason why the "crypto bro" stereotype persists.
In contrast, older investors and women are more likely to be skeptical about buying crypto. As The Motley Fool Ascent's 2024 Cryptocurrency Investor Trends Survey points out, "Crypto is not expanding past the young male demographic." And that data is backed up by other surveys from the likes of Pew and Morning Consult.
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One way of interpreting the survey data is that Bitcoin is doing a great job of "energizing the base" but isn't doing such a great job appealing to older investors and women. In other words, the same people who already invest in crypto are more excited about investing in crypto, but for everyone else, the new enthusiasm around Bitcoin isn't having much of an impact on their investment decisions. If that's the case, then the upward momentum in crypto prices might not be as strong as anticipated.
Can institutional investors pick up the slack?
If you're expecting a boost in crypto prices this year, not all is lost. That's because institutional investors -- not retail investors -- appear to be driving the latest momentum around crypto. And it's not because they're more passionate about crypto than the average investor or know more about it than the average investor.
The bottom line is that they have more money to put to work, and even boosting their Bitcoin allocation from 0% to 1% can have a tremendous impact on the amount of money flowing into Bitcoin. In just the first three months, the new spot Bitcoin ETFs have attracted more than $30 billion in assets under management.
Moreover, we're still in the early innings of what changes in institutional investor allocations could mean for the price of Bitcoin. According to some crypto experts, "3% is the new 1%." Thus, the same investors who might be allocating only 1% of their portfolios to Bitcoin could decide to boost that allocation to 3%.
There are some -- such as Cathie Wood of Ark Invest -- who think that the optimal allocation mix for Bitcoin should be well over 5%. So over time, the influx of institutional money into Bitcoin should only increase, pushing up prices.
Implications for Bitcoin
While the new survey data suggests that more investors than ever before could decide to add crypto to their portfolios this year, we're still a long way from Bitcoin going mainstream. After all, it's hard to call Bitcoin "mainstream" when older generations are still skeptical about it and the main buyers are primarily young males.
Wall Street needs to do a better job explaining Bitcoin to a vast demographic of investors who don't understand why they should be investing in crypto. Bitcoin may still soar higher this year, but to hit its full upside potential, it needs to find a way to attract first-time crypto investors.
