TL;DR
In the coming twenty years, the generation of Millennials will be the primary recipients of what is called the ‘Great Wealth Transfer’. Trillions in wealth will be passed on from the Boomer generation to their children. Guess the market cap of which asset class will benefit most. It’s the asset class that Boomers don’t understand but Millennials are fond of. You guessed it right.
Venture Capital Firm Galaxy Digital looked at generational trends in crypto investing. How will wealth flow between generations? And how do investment tendencies differ between generations?
First, let’s look at how the US generations are often defined.
- Silent Generation (circa 1925 to 1945)
- Baby Boomers (circa 1946 to 1960)
- Gen X (circa 1961 to 1980)
- Millennials (circa 1981 to 1996)
- Gen Z (circa 1997 to 2012)
As a teaser, observe how wealth is distributed among generations. See that blue wave coming, dear Millennial reader?
These generations are more or less the same size: roughly 70 million people in the US. Note how the Boomers basically own half of the pile of assets.
Millennials in Generational Theory
But wait, why do we talk about ‘generations’? Does it even make sense to cluster individuals in groups like this? How could being born in let’s say 1982 make me part of a different generation compared to someone being born in 1980?
According to the authors Strauss and Howe of the seminal The Fourth Turning, we can. The author’s core thesis is that history isn’t linear, nor random, but cyclical. We can divide recent American history into cycles of roughly 80 years (a saeculum), each divided into four seasons or ‘turnings’.
There is a High (spring) period, an “Awakening” (summer). The Awakening occurs when the next generation turns against its parents. Then comes the “Unraveling” (fall) when institutions start to decay. The Crisis (winter)concludes the cycle. Everything falls apart, making space for a new saeculum.
We are currently in the Fourth Turning after the cycle that began after World War II.
Each Turning produces its own generational character type: the “Prophet,” “Nomad,” “Hero,” “Artist” respectively.
The Boomers are the Prophets, the Millennials the Heroes.
How can this be that generations have different character traits (on average, of course)? Well, think of what it would mean to grow up as a youngster amidst a raging world war. This would shape your character in profound ways. And now imagine one generation later, which grows up in a rebuilt and stable society.
Millennials are the Hero generation. This generation is raised by protective parents. They come of age during a time of great crisis. The authors of The Fourth Turning call this generation heroes because they resolve that crisis…
What crisis will Millennials resolve?
Let’s cycle back to the topic of this newsletter: finance. The Fourth Turning has a large following among lovers of crypto. They have noted that the financial systems of the past have gone through cycles as well, of similar length (roughly 80 years), and ending in debt crises.
The start of the current saeculum in Strauss’ and Howe’s classification coincides with the reset of the financial system. Post-World War 2, the world went onto a gold-backed dollar system, agreed upon in Bretton…
Erik started as a freelance writer around the time Satoshi was brewing on the whitepaper.
As a crypto investor, he is class of 2020. More of a holder than a trader, but never shy to experiment with new protocols.
