Crypto, Cannabis, FOMO Drive New Investor Inflow

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Crypto, Cannabis, FOMO Drive New Investor Inflow

Discount brokerages such as TD Ameritrade, E-Trade, and Charles Schwab have reported increased trading volume in recent months, particularly among younger clients who have been compelled to finally get in on the action as the market breaks records and hot bets such as cryptocurrency trading promise fast money for risk takers. (See also: Over 1 Million People Join Robinhood Crypto Trading Waitlist.)

According to Bank of America Merrill Lynch, $32.3 billion was invested in global stock mutual funds and exchange-traded funds (ETFs) in one week through Wednesday, the most inflow in any similar one-week period since 2002.

Millennials, who have been hesitant to engage in the equities market despite its nine-year bull run, are becoming more interested in some of the market’s newest and riskiest sectors, such as cryptocurrency and cannabis investing. As a result, many members of the tech-savvy generation have opened brokerage accounts for the first time. Ameritrade, one of the first platforms to provide retail clients with access to bitcoin futures, reported a record number of new account openings in the most recent quarter, led by a 72% increase in new business from younger consumers.


Devin Ryan, a brokerage analyst and managing director at JMP Securities, attributes the increased activity to “fear of missing out,” or FOMO, among young investors. “It’s all interrelated,” the analyst said, stressing that Millennials, who want to get in on the profits before the bull market ends, are more knowledgeable about and interested in crypto and cannabis investments than older generations.

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Market bears, who predict an eventual correction after the market’s phenomenal run since 2009, point to the rise in activity as evidence of a bubble about to burst. Data indicates that investors have put over $258 million into 10-day-old ETFs that invest in firms tied to blockchain, the technology that underpins bitcoin.

It’s worth noting that the wealth influx hasn’t been limited to Millennials, with the three major US stock indices continuing to set new highs as reduced corporate tax rates encourage investor confidence. (See also: Ray Dalio: Holding Cash Will ‘Feel Pretty Stupid.’)

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