Crypto is an exciting place. What began as a cypherpunk dream has transformed into a global alternative financial system. There have been meteoric price rises, mainstream headlines, and controversy.

As the crypto market continues to grow, it's adoption ranges from simple, hobbyist supporters to financial and government institutions. New investors have entered the market at different points, and each type brings a new perspective.

Examining these different types of investors in the crypto ecosystem not only highlights the palette of demographics, but sheds light on how these emergent technologies are adopted.Let’s take a look at five types of modern crypto investors:

Hodlers

Hodlers are the core, dedicated proponents of cryptocurrencies that populate the polarizing Twitter arguments and got some of the best returns in the 2017 bull market.

The term “HODL” actually derives itself from a grammatical error on an old Bitcoin post that had a slight misspelling of the word “holding.”

These investors have been through the Bitcoin gauntlet. They’ve seen the lows of the Mt. Gox debacle and the highs of the 2017 ICO craze. They’re occasionally referred to as the “revolutionaries” of crypto; others identify them with irrational exuberance for tokens that have crashed in price and have no users.

No matter your opinion on hodlers, they are among the most fascinating types of crypto investors. They endure severe market swings in the volatile market of crypto and their hope in Bitcoin overcoming the odds has fomented close-knit communities of ardent supporters and legions of banking critics. They are the fervent religious believers of crypto’s potential.

According to CoinMetrics, hodlers also comprise a significant quantity of owned Bitcoin. The cost basis of many hodlers is very low when compared to most retail investors. This  they can endure the heavy swings of the market that wash out many other investors.

Curious Millennials & Gen Z

It’s no secret that Millennials and Gen Z approach investing differently than their parents. With the evolution of smartphones, mobile apps, and digital media, this younger generation has become more open to the idea of a digital future.

While older investors like Warren Buffet believe that cryptocurrency has no value, the younger generation is imagining a blockchain-based revolution - making it one of the most popular assets in this demographic’s portfolio.

Even though many younger people still do not understand Bitcoin, or other cryptocurrencies, they are fascinated by them. Roughly 43 percent of Millennials and Gen Z believed that cryptocurrencies could replace the US financial system in 2019. Maybe they’re too enthusiastic, or maybe they’ll actually be right.

Millennials and Gen Z are not enticed by 401k’s, junk bonds, and treasury note yields. They’re focused on revamping the financial system, earning staking rewards on altcoins, tapping into DeFi platforms, and riding the next meteoric Bitcoin market to lucrative returns. Look for them to form the basis of the crypto’s adoption worldwide.

Financial Institutions

Financial institutions are the highly anticipated newcomer to the crypto scene. Only a few years ago, banking executives and financial pundits would espouse the “blockchain, not Bitcoin” narrative and claim Bitcoin was “fraudulent” and “dead.” Now, their tune has changed. As recently demonstrated by a video snippet on CNBC, financial pundits are warming up to the concept of Bitcoin and cryptocurrencies.

But actions speak louder than words. Look no further than institutional developments and their growing interest in crypto assets. JP Morgan Chase, the world’s most valuable investment bank, is reportedly exploring a merger of its Quorum blockchain with Consensys -- the company behind several prominent ethereum endeavors.

We’ve heard similar headlines, but it doesn’t stop there.

Crypto derivatives are exploding, VCs are pouring money into DeFi, spot market volumes are reaching new highs, and regulators are approving institutional crypto products from Europe to Singapore. With the increase in institutional activity, comes the coveted liquidity of cheap government credit and well-defined asset instruments, which is the path forward to widespread acceptance of crypto assets in the long-term.

Professional Traders

Professional traders have long been some of the earliest proponents of crypto markets because of one word -- volatility. Professional traders, whether swing traders or arbitrageurs, love market volatility due to the increased chance of profit and loss.

Crypto traders even have their own niche corner of Twitter and, in many cases, double as hodlers. Some are former quantitative analysts from Wall Street, wizards of trading algorithms that scalp ranges in altcoins, prop shops, or good old fashioned whales.

These crypto traders account for significant portions of both spot and derivatives volumes. Incidentally, they’re likely responsible for many of the progressive developments in crypto derivatives in recent months.

The Common Investor

Last but not least, the bulk of retail investors -- the common investor. When retail joined into the crypto market, price volatility and Fall 2017 ICO chaos ensued. Volume from retail was tempered by the 2018 bear market, but recent analyses point to a gradual pick-up in retail interest.

Retail crowds include the casual investors, looking to diversify their portfolio with Bitcoin, or that friend who wouldn’t stop talking about Bitcoin at Thanksgiving. Retail interest is considered the wave that swells crypto to mainstream acceptance and their full entry into the crypto market will likely coincide with institutional developments.

Retail interest in crypto helps support the evolution of new mobile apps, wallets, and DeFi platforms, empowering users to access investments with a few clicks on their phone.

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