Young Millionaires Are Betting 17% Of Their Portfolios On Crypto – And They're The 'Conservative' Ones

What could be a surprising trend is developing in the world of cryptocurrency investing.

That is, among wealthy millennials, those who identify as ‘conservative' investors are allocating more to digital assets than their risk-embracing counterparts.

Recent data from Bank of America Private Bank, originally cited by CNBC's "Make It" series, found that millennial investors – aged 21 to 43 – who have at least $3 million, are taking an unconventional approach to crypto. Self-identified conservative investors in the group hold an average of 17% of their portfolios in crypto, while those who consider themselves aggressive investors maintain a slightly lower 14% allocation.

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The findings upend traditional investment wisdom, where conservative portfolios typically lean heavily on stable assets like bonds, while aggressive ones embrace volatility for potential higher returns.

“It’s more conservative to own crypto? It goes against all logic,” says Brad Klontz, a certified financial planner and professor of financial psychology at Creighton University. “A lot of crypto investors are significantly more likely to be anti-establishment, with less trust in the systems, less trust in the government.”

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The counterintuitive approach reflects a shift in how young, wealthy investors view crypto. Rather than seeing it purely as a speculative asset, many view it as a hedge against traditional financial systems.

Stephane Ouellette, founder and CEO of digital asset firm FRNT Financial, points to market timing as a factor. “It’s surprising, but I also think it has to do with the exact moment we’re in,” he said to CNBC. “We don’t have an aggressive, momentum-style market in digital assets that typically attracts aggressive investors.”

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The current crypto market landscape differs markedly from the boom times of 2021. After the market plunge in 2022, following the dramatic collapse of then-crypto trading platform FTX, many speculative investors exited the nascent sector. The subsequent recovery has been driven by what Ouellette describes as “ardent bitcoin believers,” who view crypto as an alternative to conventional financial instruments.

For young millionaires, the appeal of crypto might stem from their unique financial position. Mike Pelzar, head of investments for Bank of America Private Bank, suggests that when you already have significant wealth, the economic failure required to derail your portfolio becomes a primary concern. Some view cryptocurrency as insurance against such scenarios.

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“Ironically, many of those younger investors actually see [crypto] investments as arguably safer,” Pelzar said to CNBC.

The data indicates a divide in investment philosophy. While traditional financial advisors typically gauge risk tolerance through standardized questions about market volatility and return expectations, young, wealthy investors are redefining the parameters based on their worldview and concerns about economic stability.

For millennial millionaires, a conservative investment strategy no longer simply means minimizing volatility – it means preparing for a range of economic scenarios, including ones in which conventional financial systems fail.

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