Data from Binance on Generation Z: Low turnover, long holding, little leverage, preference for ETFs.

Written by: Andjela Radmilac

Translated by: Saoirse, Foresight News

Like fashion, the investment market often revives old trends that have long been dormant. The cryptocurrency cycle experienced by millennials has spawned yield-bearing Dogecoin and various novel financial products themed around food. Now, as Generation Z enters the market, dressed in wide-leg jeans and carrying retro digital cameras, they show a keen interest in traditional investments similar to that of their parents.

Wide-leg low-rise jeans are back in style, and their risk tolerance in investment portfolios is similarly decreasing.

A report from Binance Research on August 12 studied how users of different generations utilize direct stocks, tokenized bStocks, and traditional financial perpetual contracts on the exchange. The youngest group of users is not frequently using leverage or engaging in high-frequency trading. Among these three types of products, Generation Z has the lowest turnover rate among the working-age population. This conclusion is based on short-term data from Binance users; its direct stock products will not scale until June 2026.

The most traditional, conservative, and lacking in speculative creativity portfolios in the crypto space are most likely held by Generation Z.

(Note: The generational definitions and birth years in the text are:

• Generation Z: 1997–2012
• Millennials (Generation Y): 1981–1996
• Generation X: 1965–1980
• Baby Boomers: 1946–1964)

A Rebellion with Fees

ETFs best exemplify this generational difference.

At the beginning of August, ETFs accounted for 25% of the direct stock trading volume of Generation Z, up from 14.6% in June. In comparison, the proportion for millennials was only 9.5%, indicating that the stock trading of younger individuals directed towards funds is more than double that of millennials.

Compared to trading volume, the structure of funds flowing into these funds is even more noteworthy. In June, unleveraged ETFs accounted for 18.5% of the net inflow of stock funds for Generation Z, rising to 21.9% in July; while individual stock inflows decreased from 77% to 74.2%.

In July, the overall stock investment from Generation Z shrank, with net investment falling by 17.4%, but the inflow into unleveraged ETFs remained almost stable, dropping only 2%. Individual stock inflows decreased by 20.4%, while leveraged product inflows plummeted by 28.5%.

According to Binance data, Generation Z was also the only group in July to see an increase in the number of ETF holders, with a growth of 2.9%; the number of millennial ETF holders decreased by 4.5%, and Generation X decreased by 5.9%.

Thus, this is not as simple as young traders buying a bit of the S&P 500 ETF on the side while engaging in stimulating speculative trades. When Generation Z reduces overall investment, ETFs are the sector where they continue to allocate funds.

Their individual stock holdings, while not entirely like the portfolios constructed by regional pension funds, are certainly not the lottery-style speculation that is commonly perceived.

In accounts belonging to Generation Z that only buy and never sell, the average single direct stock investment was highest in the Charles Schwab U.S. Dividend ETF (SCHD) at $16,567, followed by Broadcom at $12,370. Overall holdings clearly lean towards the semiconductor and AI sectors; however, popular speculative stocks like Tesla and Nvidia among retail investors had much lower average buy amounts in bStocks, at only $633 and $514 respectively.

In other words, Generation Z still has a favorable view of the technology and AI sectors, but they won’t allocate large sums of money to popular stocks with fervent fan bases.

Holding data also confirms this point. The report revealed that about 22% of Generation Z direct stock accounts have never placed a sell order, while the proportion for Generation X is 19%, and only 9% for baby boomers. Millennials lead in the "never sold" category at 30%, which breaks the stereotype of them being reckless in financial management.

If we broaden the definition from "never sold" to "buying more than selling," Generation Z jumps to the top.

Approximately 76% of Generation Z bStocks accounts are net accumulation accounts, the highest among all generations, 9 percentage points higher than millennials. In the direct stock segment, 77% of Generation Z accounts are continuously adding to their holdings; by comparison, Generation X stands at 74%, and baby boomers at 68%.

They are not just trading less. In Binance’s focus on asset holding rather than short-term derivatives trading, they are mostly in a position of continuous accumulation.

Perpetual Contracts for Trading, ETFs for Long-Term Holding

Turning attention to perpetual contracts, this phenomenon becomes even more interesting. Ideally, a generation that grew up with cryptocurrencies should be adept at using such products. They do use perpetual contracts but with less aggression than older users.

Generation Z accounts conduct an average of 13 traditional financial perpetual contract trades per month, compared to 17 trades for millennials, 16.5 for Generation X, and 19 for baby boomers. Only 14% of Generation Z’s perpetual contract accounts are high-frequency traders, lower than the 18% for millennials and Generation X, and even below the 16% for baby boomers.

This creates a somewhat contrasting situation: a 22-year-old using a crypto exchange to trade stocks conducted fewer perpetual contract trades than their baby boomer parents.

The usage of leverage and inverse ETFs displays the same pattern. 88.2% of Generation Z traditional financial perpetual contract accounts do not trade in leverage or inverse ETFs, compared to 84.5% for millennials and 85.9% for Generation X. In the bStocks segment, 98.9% of Generation Z accounts avoided these types of products, higher than other working-age groups.

Baby boomers still top the list in avoiding leverage and inverse products. Overall, they have the highest proportion of accounts avoiding leverage and inverse products; in the direct stock segment, 98.9% of baby boomer users avoid such products, while among Generation Z the figure is 96.5%.

Thus, Generation Z has not completely transformed into baby boomers. However, among those not yet retired, their investment behavior is strikingly similar.

Chart showing the low proportion of Generation Z using leverage and inverse products (Source: Binance Research)

What’s more noteworthy is what they trade and where they actually allocate their funds, both of which are clearly distinguished.

In July, leverage and inverse ETFs accounted for 9.25% of the turnover rate for Generation Z direct stocks, but only 3.93% of the net inflows. By early August, this net inflow ratio further declined to 2.65%.

This indicates that leverage tools are being used for their intended purpose: short-term positions, rather than as a place to store long-term principal.

The same applies to traditional financial perpetual contracts. About 60% of Generation Z accounts are net buyers, the highest proportion among all age groups, but the net cash flow is less than 1% of the total trading volume. Traders frequently open and close positions, almost never leaving long-term funds within.

Stock assets, however, are completely different. The net inflow rate for direct stocks among Generation Z is 26.5%, with an average net inflow of $1,898 per account.

This distinction explains why merely looking at whether young people use perpetual contracts fails to reveal the whole truth. They do engage in trading, but their long-term funds are held elsewhere.

Previous research by Binance targeting new-generation investors provides reasonable clarification. Generation Z accounts for approximately 44% of Binance’s direct stock and bStocks users, and 45% of traditional financial perpetual contract users; they are the largest user group in the direct stock and bStocks segments and have a scale in traditional financial perpetual contracts that is roughly equal to that of millennials. Among all generations, over 90% of traditional financial product users come from emerging markets, where it is very difficult to purchase U.S. stocks through local traditional brokerages.

For some of these users, this crypto exchange is, in fact, the most convenient brokerage they can access.

They are familiar with the platform interface, have funds ready in their accounts, can purchase fractional shares, and have the ability to trade outside of regular U.S. trading hours. Binance data shows that 13% of all direct stock users are Generation Z clients from emerging markets, with stock assets of less than $2,000.

Consequently, their behaviors become easy to understand. The exchange does not need to cultivate every young user into a perpetual contract trader; it can also serve as a channel for users to purchase conventional investment products.

Past Funds Falling into Investment Traps

This contrast is quite interesting, considering that many financial products born in the early cycles of crypto can be deemed madness by traditional standards.

Pickle Finance launched Jar and Farm products that allow users to earn rewards by depositing tokens, layering yields from other protocols. This mechanism makes sense logically in finance, but the naming sounds like a retirement product designed whimsically in a supermarket.

ShibaSwap also uses "Bury" to indicate staking tokens, featuring token names such as SHIB, LEASH, and BONE in the interface. The crypto industry has applied playful naming to financial operations that can already confuse newcomers.

For a decade, products of this nature have led to a prevailing judgment: young people growing up in the Dogecoin era would be more adaptable to such chaotic and high-risk financial play.

However, data from Binance tells a different story: young users are increasingly allocating stock funds into unleveraged ETFs, trading less frequently than both millennials and Generation X, with leverage-related investments constituting only a small fraction of net investments.

This does not mean they have abandoned cryptocurrencies. A 2023 survey conducted by the Financial Industry Regulatory Authority Foundation and the CFA Institute showed that 55% of U.S. Generation Z investors hold cryptocurrencies, and CryptoSlate previously reported on the widespread interest among young Americans in crypto assets.

An even more interesting inference: the use of cryptocurrencies and the pursuit of extreme high-risk investments have never been the same thing.

For those encountering financial markets for the first time through a trading app, Binance is not necessarily a rebellious alternative beyond traditional brokerages. It's simply a financial interface they are already familiar with. Once the platform launches stocks and ETFs, their investment preferences do not need to replicate the speculative style of early crypto.

This is precisely the difference between Generation Z and millennials, as well as baby boomers.

They haven't constructed a classic retirement investment portfolio. Allocating semiconductor and AI stocks, tokenized stocks, and functioning 24-hour markets are not replicating wealth management solutions from the 1990s. But when they do operate these products, they employ a surprisingly old-fashioned mindset: buy, hold rather than sell, and do not let every position rely on leverage.

For years, the crypto industry has continuously packaged finance in quirky ways to attract younger audiences. However, this youngest cohort has embraced the platform interface while discarding the bizarre high-risk designs within it.

Fashion can bring wide-leg jeans back to trend, and the financial market can also revive simple investment ideas: buy assets, hold for the long term, and expect gradual appreciation of those assets. This market can fully accommodate such choices.