As always, great content mate. I think your analysis of cyrpto investors that are otherwise not investing in anything has some merit.

I think it also has something to do with culture and the active avenues of information for individuals, particularly for younger investors. I'm not sure I have ever seen a post coming across my feed about how to buy stock or how to open an IRA yourself. Now, I know there are plenty of articles and videos on that topic, but they they don't get shared in my circles. Unless your employer supports a 401K, you're likely not going to put in the leg work to figure out where to open a traditional investment retirement account.
Also, it seems there may be a much higher minimum for opening an IRA--I didn't look extensively, but the minimums I was finding were $1,000-$3,000. Like you mentioned, if small-scale crypto investors are starting off simply by diverting small amounts of spending, then they'd likely never build up that kind of egg to open an account.

As far as cultural differences, there is sort of this prideful ownership mentality that I have seen. I have met a lot of millennials that feel like the mutual fund is their parents' invention and crypto is theirs. We tend to support and gravitate towards whatever feels most like your tribe.

I wonder how big a factor liquidity is for some people. Even if they hope and plan to hold their crypto long-term, it may still factor in their mind as essentially cash in hand. Of course, an IRA is very different. Yes, everybody hears to only invest what you can lose, but people will still find comfort in believing they could cash in their crypto if something came up. I suppose if they were buying stock individually, then that would be analogous.

I am a millennial, but my story and reasons for investing in crypto are a little different than the ones you explored here. I am a lawyer and if I hold any stock outside of a mutual/index fund then I have to do regular disclosures with my clients and employer and do additional conflict checks. At the low level I'm investing, that was just too much work. Crypto is a great alternative for me. I contribute to a 401K already and have been slowing building a cash reserve in a savings account. That is the money I use to invest in crypto.

I like your point about the volatility of crypto preparing people to not sweat stock market swings. But the opposite is also true. Crypto investors expect a quick turn around. That doesn't often happen in the stock market.

Cheers.