Millennials and Gen Z Invested When It Was Fun. Now They’re Riding Out a Crash

9 minute read

“Being open to crypto astrology might literally change your life,” says Maren Altman.

She’s a 23-year-old astrology influencer with over 1.2 million TikTok followers, and she believes the study of celestial bodies can be a valuable tool for making sense of cryptocurrency. “I’m tracking planetary cycles,” she says. “So I look at the positions of the planets at a given moment and then other times in history.” Altman emphasizes that you don’t have to be an expert trader to take advantage of this approach to investing. Just learn the signs that the market is about to get worse and “put some money aside to buy in if it dips.”

Crypto astrology is just one unusual example of how younger generations are doing away with traditional investing methods in favor of less time-tested approaches, from meme stocks to crypto to NFTs. Fueled by the economic volatility of the COVID-19 pandemic, millennial and Gen Z investors have been taking big swings on high-risk, high-return trades rather than letting investments simmer.

They’re also weathering a punishing crash. On May 14, Altman posted a reassuring message for everyone who lost money in the recent debacle. The market, she said, would stabilize—especially since Luna was “eclipsed under a lunar eclipse.”

She was talking about the near-total collapse of the crypto token Luna, which accompanied the fall of its sister stablecoin TerraUSD (UST) and plunged the broader crypto market into freefall last week. The crash wiped out more than $400 billion in crypto market capitalization in a matter of days and bankrupted many investors.

It’s been a “cryptocurrency bloodbath,” says Glauber Contessoto, a 34-year-old crypto enthusiast better known as the “Dogecoin Millionaire.”

Contessoto made a name for himself in the crypto world last year by exceeding $1 million in Dogecoin holdings just over two months after investing his life savings of around $180,000 in the meme coin in 2021. And while he says that creating a dollar-pegged stablecoin like UST that can’t stay stable “takes all of the trust out of what everyone’s trying to do with crypto,” he’s committed to staying the course.

“Whether you’re looking at Bitcoin or Dogecoin or Cardano or Ethereum… all of them have seen fluctuations,” he says. “The issue with newer coins is it’s harder to gauge if they’re going to recover or not, because we haven’t seen the data to prove that.”

Crypto’s decline is reflective of a wider retreat from risky assets like tech stocks that’s been triggered in recent months by inflation, rising interest rates, and economic uncertainty brought on by Russia’s invasion of Ukraine. But crypto’s downturn has been notably sharper than the drop in the stock market. While the S&P 500 has slumped by roughly 18% so far this year, Bitcoin’s price has plummeted by nearly 40% in the same timeframe.

Even with Dogecoin falling by over 50% this year, Contessoto’s faith in crypto’s long-term viability hasn’t waned. “All of this is temporary,” he says. “If you look at the history of Bitcoin, it’s still the most incredible investment you could have made in the last decade. We’ve seen drops in Bitcoin of 80%, 90% over the years and it never gets easier. But you stand firm because you know that crypto is the future and you know that everything will pan out eventually and slowly rise.”

Why young people got so into investing

Before crypto and NFTs began spiking in popularity, meme stock mania set in amongst young people. It was January 2021, and users of Reddit’s WallStreetBets subreddit banded together to intentionally inflate GameStop’s stock in order to force a short squeeze. That made the market more volatile.

It was a fateful moment in time for retail investors. More than 10 million Americans opened new brokerage accounts in 2020, according to a 2021 report by consulting firm Deloitte. Encouraged by pandemic-induced shocks that led to record highs and lows, this new class of individual investors was responsible for 20% of all stock trading less than a year after the pandemic’s onset and has continued to grow more empowered as time has gone on.

Most of these new investors are from younger generations. Survey data from brokerage firm Charles Schwab suggests that roughly two-thirds are millennials and Gen Zers, meaning young people are enjoying an unprecedented level of market power. They’re also wielding it in unprecedented ways. Research conducted by global data intelligence company Morning Consult indicates that 13% of Gen Zers and 11% of millennials are willing to take substantial financial risks in expectation of earning substantial rewards as compared to 3% of Boomers.

The possibility of getting rich quick is what appeals to many younger people about the crypto and NFT markets, says 33-year-old Shane Martz, a crypto influencer known on social media as the Jolly Green Investor. “The time to take risks on investments is when you’re young,” he says. “And right now, crypto and NFTs are that scene. They offer you the opportunity of getting back 10x or 100x on your investment within a few months or even weeks.”

A November report published by Pew Research Center showed that roughly 31% of 18-29-year-old Americans have invested in, traded, or used a cryptocurrency, compared with smaller shares of adults in older age groups. Altman attributes this trend to the rise of easily accessible investing advice online.

“The internet opens access to information that might have previously been gate-kept or intentionally just not advertised to the public,” she says. “When I was taking business school classes, I felt like there were certain words for things that were—I don’t want to say pretentious—but intended to keep people out. It doesn’t need to be that complicated. Online, people can cut through that easier.”

That’s even how Contessoto got his start. He says he first began looking into crypto after the popular commission-free investing app Robinhood took steps to curb the trading of GameStop stock and other heavily shorted securities in early 2021—and ultimately learned about Dogecoin on a Reddit thread.

“I had some money invested in GameStop and then after Robinhood pulled what they did, it became apparent that style of investing was no longer working for me” he says. “I started looking at alternative ways of investing and that’s how I came across crypto.There were a lot of people in my shoes who lost a lot of money and started switching over.”

What now?

As the past week has shown, putting your faith in more volatile assets doesn’t always pan out. Newbie investors are often on the lookout for an investing opportunity that has the potential to change their fortune overnight because of success stories they’ve seen online, says Martz. But those types of gains aren’t the norm.

“Social media is the reason everyone really wants to get involved in these newer trends because it makes them seem so easy and glamorous,” he says. “Everyone’s always chasing the next shiny thing. They’re seeing people driving around in Lambos on TikTok and Instagram saying, ‘I work two hours a day from anywhere in the world,’ or, ‘I just turned $1,000 into $500,000.’ But the reality is that successful investing takes a lot of work and dedication.”

Even after his unprecedented success investing in Dogecoin, Contessoto says that he still cautions less-experienced investors against wild speculation. “People ask me questions all the time like, ‘How do I do what you did?’ But I consider Dogecoin this once-in-a-lifetime, perfect-storm scenario. I couldn’t even do it again.”

Instead, he advises those just getting into the crypto space to stick to “blue-chip cryptocurrencies” like Bitcoin and Ethereum. “If you look at their track records, those two are the powerhouses. Obviously, it’ll be a slower grind with a slower growth rate. But it’s like, you can either play it safe or you can try your hand at a bunch of speculation plays and maybe lose all your money.”

Still, Contessoto realizes it might seem disingenuous to give others advice that he didn’t take himself. “It’s hard to tell people to do something that you didn’t,” he says. “You know, I’m saying, ‘Hey, play it safe—buy Bitcoin and Ethereum.’ But I was over here YOLO-ing into Dogecoin and it happened to work out great for me.”

Martz says that crypto’s current debacle illustrates how the crypto market can be manipulated just like the stock market. “We’ve seen over the past week that there’s large entities buying and selling to drive the price up and down. And unfortunately, it’s the whales that win the game every time. The retail investors always lose,” he says. “So the best thing you can do is educate yourself and try to take advantage of the trends.”

But that doesn’t mean that a return to traditional investing is seen as the way forward for those who have made the switch. While some critics view crypto as a Ponzi scheme, Contessoto says they’re missing the big picture.

“A lot of these old-school investing guys look at crypto as something that doesn’t create anything and is only worth more because more people are buying into it,” he says. “But we’re talking about a new form of money that didn’t exist a little over 10 years ago. It’s something more people should research and try to understand how it can be beneficial.”

For those who are looking to the stars for an answer, Altman predicted on TikTok that prices will somewhat restabilize and improve over the summer. “Once eclipse season ends, I expect a lot of this insanity to end,” she said.

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Write to Megan McCluskey at megan.mccluskey@time.com