Damien is 22 years old, he loves football, his studies, parties, social networks, good music, in short, he has everything of the young person of 2023. Or almost.
Because Damien has the distinction of owning only cryptocurrencies. "98% of my assets are in cryptos," he tells us. In other words, only 2% of his money is available in euros.
This student from Lyon first became interested in cryptos in 2017, during the previous Bull Market. At the time, bitcoin had risen in less than a year from $1,000 to almost $20,000, and he took the opportunity to get into the market with "a few hundred euros".
Like many investors, he lost a large part of his stake between 2018 and 2019, but he enjoyed runaway success with the rise of the markets during the Covid crisis. Today, at just 22, he owns around €300,000 in cryptos 😅
To give you an idea, that's roughly double the average French household's net worth (€150,000)!
We agree, Damien is obviously not a representative case of young Europeans of his generation; he's a bit of a UFO 👾
Except that "UFOs" like Damien are being seen more and more all over France - and Europe.
Why such a phenomenon?
How do these young people invest?
And above all, what impact does this have on traditional finance?
That's what we at The Big Whale set out to understand 🐳
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To find out, we spoke to dozens of young people who have also moved into the crypto world and talk more about decentralised finance than life insurance or popular savings books.
Some of them are well known in the ecosystem, others preferred to remain anonymous.
We also approached banks and fintechs to find out what they think of this new generation and what they are doing, or not doing, to adapt to them and attract them.
But before we go any further, we need to understand what motivates these young people!
The reasons are actually many:
There is obviously the desire to make money 🤑. Like their elders, these investors, who are all aged between 16 and 25, also want to make THE big score and, depending on their ambitions and career path, buy themselves a holiday, pay for their studies, or even "put the daronne (mum, editor's note) to bed" as some say. The pattern is the same, except that the playing field is cryptos.
Until a few months ago, it was possible to find DeFi (decentralised finance) protocols that offered you more than 10% return... monthly! "It's bound to be tempting," laughs Hugo, 23. But it's also very risky. The fall of Terra-Luna and the succession of scandals that followed are the best example of this.
Price and transparency
Besides the financial appeal, young people are also attracted by the crypto world, which matches their aspirations and seems "simpler" to them.
When we talk about simplicity, it's not in terms of technical use - crypto is still a complicated universe - but in terms of the freedom of decision-making.
"With cryptos, I do what I want with my money. I don't have to give an account or ask my bank for authorisation," explains Noé, who is one of the co-founders of White Loop Capital, a French fund that invests in Web3 projects.
It's also possible to trade at any time of the day or night. "There are no opening hours like there are for traditional financial markets," Simon insists for his part.
Many also stress the importance of transparency in the crypto universe. Thanks to blockchain, everything is traceable, transactions are visible, and there are no hidden fees. "Nothing is free in crypto, but you know what you're paying for, and that's very important," stresses Hugo, who uses DeFi and stablecoins whenever he can to do without euros as much as possible.
"Bank charges are too high for the level of services we get," explains Simon, who still has a bank account because "it's essential" to get paid for his work placement.
How many young people are there in France and Europe? Hundreds of thousands, millions? It's hard to say. What is certain is that their numbers are growing all the time 🚀
According to various studies, including those by the Association for the Development of Digital Assets (Adan), 15% of 18-35 year olds have already bought and sold cryptocurrencies. For the 18-25 age group, this figure could exceed 20% according to some estimates! And the trend is not about to reverse.
For the moment, traditional finance is not too worried about these figures. When questioned, most banks, which did not wish to comment, nevertheless acknowledge the phenomenon.
"Something is happening, that's a certainty," explains one banker, while qualifying: "Does that mean this is the start of a financial revolution?" Not in the short term, obviously.
A risk for banks?
Today, cryptos and DeFi represent just a drop in the financial ocean, and banks' income comes mainly from older categories, especially the over-50s, i.e. those with assets, both financial and property.
But banks would be wrong to underestimate the phenomenon. Because while Damien, Noé and the other young crypto "aliens" are not very numerous today, and especially not very powerful financially, they will grow, and their assets with them... "We're going to have to adapt to this new deal", they admit on the side of a major French bank.
Some players, especially on the fintech side, have already begun to adapt. That's the case with Trade Republic: the German investment app, which claims just over 2 million users in Europe, has recently stepped up the pace on cryptos, in particular to attract this younger generation.
"We want to enable these new investors to go to both traditional markets, i.e. equity markets, and also cryptos," explains Matthias Baccino, head of France at Trade Republic.
Others believe that this new generation will eventually return to the "straight and narrow" and leave cryptos gently behind. "You'll see that when it comes to buying a house or preparing for retirement, most will prefer to go to the good old banks because it's more reassuring," laughs one banker.
Is he wrong?
Only the next few years will tell.
