Why Millennials Down Under Are Investing for the Future in Cryptocurrency
One-in-five millennials aged 25 to 40 in Australia are investing in cryptocurrency like Bitcoin and other digital assets. Almost 50% of all millennials invested in cryptocurrencies ‘Down Under’ made their initial acquisitions during the economic uncertainty of 2020.
With millennials benefitting from additional free time at home and the surge of social media interest in cryptocurrency investing, more individuals have acknowledged the increasing accessibility of cryptocurrencies via reputable, AUSTRAC-registered exchanges. According to Buy Bitcoin Worldwide, there are no fewer than ten cryptocurrency exchanges and brokers currently serving the Australian market. It also states that the likes of CoinSpot have been trading Down Under since 2013 and provide support for more than 100 altcoins, aside from Bitcoin, Ethereum and Litecoin.
More than a third of Australian millennials stated that they take advice from friends and family when investing for the future. With more millennials actively discussing crypto assets on social media, it’s clear that cryptocurrency trading is increasingly on the radar of young and middle-aged adults looking to the future.
This survey of more than 1,000 crypto investors was led by fund manager Vanguard Australia, which found that the millennial demographic is now the dominant age group for buying and selling cryptocurrencies. It’s clear that investors in Bitcoin will have generated significant returns on their money in the last 12 months. The value of Bitcoin alone has risen six-fold to a peak of $81,500 in April 2021. Although it has since pared some of those gains and has settled around the $50,000 mark, it still represents an almost four-fold return on investment.
Nevertheless, Bitcoin and other cryptocurrencies remain a risky investment. They are some of the most volatile assets one can trade with a broker or exchange. It’s not unusual for the price of Bitcoin to spike up to 10% within the space of 24 hours, for example. The key for anyone considering cryptocurrency investments today for the first time is to avoid diving in head first. The Fear of Missing Out (FOMO) concept has never been truer with cryptocurrency investments than it is today, as investment professionals struggle to ascertain just how high these digital assets can rise due to no historical benchmarks.
Millennials should be mindful of declaring cryptocurrency profits
Given the potential profits that some Australian cryptocurrency investors may have secured on the likes of Bitcoin in the last 12 months, it’s no surprise that the Australian Taxation Office (ATO) is taking a keen interest in cryptocurrency traders. The ATO is engaging in data-matching with the nation’s cryptocurrency exchanges to pinpoint individuals it deems to be undeclaring capital gains on cryptocurrencies within their tax returns.
It’s becoming increasingly harder for cryptocurrency investors to avoid the ATO. It has legally enforced cryptocurrency exchanges to divulge crypto wallet addresses, transaction details, deposits, withdrawals and quantities to the ATO, with over 600,000 Australians involved in crypto trading during the current financial year expected to be under the microscope.
Australians that are caught intentionally failing to declare capital gains from cryptocurrency investments could be stung with financial penalties worth up to 75% of the tax owed. That’s on top of the tax itself and any interest accrued from the shortfall.