$83 Trillion Baby Boomer Wealth is Set to Enter Crypto, According to Galaxy Digital

As Baby Boomers pass on their wealth, Zac Prince of Galaxy Digital predicts that significant capital will flow into cryptocurrency markets within the next two decades. This shift is set in motion as younger generations inherit wealth from their elders.

Key Takeaways

Massive Wealth Transfer: $83 trillion is expected to change hands from Baby Boomers to younger generations in the next 20-25 years, with a substantial portion heading to heirs.
Shift in Investor Preferences: Younger investors are more comfortable with technology-driven platforms compared to traditional investment methods.
Institutional vs. Retail Sentiment: While retail interest in crypto may be declining, institutional adoption is on the rise, indicated by new financial products like Bitcoin ETFs.
Young Investors Leading the Charge: A significant percentage of younger investors already own crypto, and many believe it will play a crucial role in future financial systems.
GalaxyOne's Strategy: The company aims to cater to affluent investors with tailored services for integrating crypto into investment portfolios.

Crypto Baby Boomer Fortune

Zac Prince discusses the expected wealth transfer from Baby Boomers to younger generations and how this shift could be pivotal for cryptocurrency adoption. He highlights the differences in investment preferences between generations, the impending wealth transfer statistics, and the growing interest from young investors in digital assets.

The Imminent Wealth Transfer

According to the UBS Global Wealth Report, an astounding $83 trillion is anticipated to be transferred between generations over the next 20 to 25 years. This transfer consists of $9 trillion moving between spouses and $74 trillion expected to be inherited by children and grandchildren. The United States alone will contribute over $29 trillion, with Brazil and mainland China following at $9 trillion and $5.6 trillion, respectively.

Estimated Wealth Transfer Chart

Prince points out that the patterns of wealth transfer do not always correlate with a country's population size or GDP. For instance, Italy, despite having a smaller population and a lower GDP than Japan, is projected to experience greater inter-generational wealth transfers due to its higher savings rates and home ownership among older citizens.

GalaxyOne aims to leverage this shift by focusing on mass-affluent investors, identifying approximately 20% of U.S. households as potential clients with annual incomes of $200,000 or net worths of $1 million. Prince emphasizes that this audience has unique requirements that may not be adequately addressed by platforms like Robinhood and Coinbase. He suggests that customer service and personalized product offerings will be key differentiators for GalaxyOne.

Diverging Sentiments: Retail vs. Institutional

While retail investors are feeling bearish, with Bitcoin down about 10% alongside declines in gold, silver, and stocks at the end of 2024, Prince sees this trend as potentially bullish. He notes that negative sentiment often precedes market rebounds.

Data from the FINRA Foundation highlights that the percentage of U.S. investors considering crypto has dropped from 33% to 26% between 2021 and 2024. Currently, 66% perceive digital assets as extremely or very risky, up from 58%. Conversely, institutional adoption of cryptocurrencies continues to grow, signified by firms like Morgan Stanley launching Bitcoin ETFs and traditional financial institutions enhancing crypto access.

Prince believes the disparity between retail and institutional sentiment is due to the gradual opening of distribution channels. He notes, “Many of these channels are still closed and progress is slow. For example, new ETFs have just become available over the past year, but some firms have a one-year lockout period before offering them to clients.” He anticipates that institutional products will continue to expand through 2025.

Young Investors Pave the Way for Future Growth

Research from Coinbase shows that 45% of younger U.S. investors own cryptocurrency, compared to just 18% of older generations. Younger investors allocate about 25% of their portfolios to non-traditional assets, which is triple the 8% among older generations. Additionally, a significant majority of younger adults believe cryptocurrency will have a much larger role in future financial systems.

In South Korea, trends reflect similar sentiments; over half of citizens aged 20 to 59 have experience trading crypto, with 27% currently holding digital assets. On average, these holders possess 13 million won (approximately $9,547) in cryptocurrency, accounting for 14% of their total financial assets.

To cater to this demographic shift, GalaxyOne plans to introduce various products, including corporate treasury solutions, crypto portfolio lines of credit, and staking services. Prince indicates that they intend to merge cryptocurrency with traditional asset classes in unique ways not previously seen in the industry by the second half of 2025.

Looking ahead, Prince concludes that the rapid adoption of stablecoins could coincide with what is likely to be the largest wealth transfer in history—bringing together a generation that is already inclined toward digital assets.