Young traders don't care if stocks and crypto are in a bubble. They could get a rude awakening.

By Gordon GottsegenA new survey found that the majority of active traders are bullish, despite some thinking the market is in a bubbleStock-market bulls have been celebrating lately. The S&P 500 SPX has clocked in two consecutive years of more than 20% growth, and is already up around 3.5% in 2025.The majority of individual traders think the good times will continue throughout the year. However, a significant portion traders also believe that the market is in a bubble.Although it may seem like being bullish and, at the same time, thinking the market is in a bubble is contradictory, this is the sentiment captured in a recent survey by Nasdaq and Tastytrade. The survey polled 1,036 retail investors who trade stocks at least every three months, and have $1,000 worth of investments or more.One of the key findings of the survey was that the majority of respondents were bullish about market performance in the next 12 months."Fifty-nine percent of active traders are bullish. One in 10 are very bullish. That's a really staggering number for me," Scott Sheridan, the chief executive of Tastytrade, told MarketWatch.Meanwhile, only 16% of respondents were bearish, and 24% reported feeling neutral.Survey respondents also wrote down the reasons they were feeling bullish. Some of those reasons included:"I think that the stock market will have record performance this year on the back of AI.""Because we have regulations coming to the crypto market.""I feel good about the strength of the market and believe that there will be more business-friendly policies in the next 12 months.""President Trump will fix the economy."Almost all (86%) active traders were excited about stocks and equities. And among stocks, most traders (75%) were somewhat or very optimistic about the information-technology sector.After stocks and equities, crypto was the second-most exciting asset class to traders, but this excitement varied by age. Seventy-seven percent of traders 18 to 34 years old were excited about crypto, compared to 65% of those 35 to 54 and only 31% of those 55 and older.Despite that excitement, young investors were more likely to believe crypto is in a bubble. Fifty-seven percent of those age 18 to 34 thought crypto was in a bubble, compared to 46% of people age 35 to 54 and 48% of those 55 and older.Active traders were also asked which kinds of stocks are in a bubble. Artificial-intelligence stocks, social-media stocks, meme stocks and "Magnificent Seven" stocks were common answers, with responses ranging between one-third and one-half of those surveyed, depending on the age group.On top of that, the youngest cohort was always the most likely to think specific investments are in a bubble.Recall that young investors were also more excited about equities and crypto, and you may be scratching your head."I'm confused because they're diametrically opposed," Sheridan said. "When I look at it, my feeling is it doesn't make sense, other than most people have FOMO."Sheridan pointed to that fear of missing out as the possible explanation. Traders have been watching - or participating in - the bull market for stocks and crypto, and they want to continue to enjoy the spoils. This bias could explain the general sense of bullishness among the survey respondents."It's easy to enjoy the upside. The problem is, what happens if it turns around?" Sheridan said.Traders may be looking at current valuations for stocks and crypto, and in their heads they may worry about the bubble popping - but that doesn't seem to be influencing their behavior yet.Why not? Sheridan pointed out that the last real market downturn caused by an economic recession - ignoring the quick pandemic drop in 2020 - was during the Great Recession in 2008. Investors who are 18 to 34 years old are likely too young to remember or have been actively trading during that time. As a result, this creates a gap between what young traders think a bubble is, and what a bubble bursting actually feels like.So these contradictory sentiments may continue to exist until the next bubble pops."We'll have to see how this bull market ends," Sheridan said.In the meantime, he noted that investors should practice discipline - and stick to their strategy when the market is going up, and when it's going down.-Gordon GottsegenThis content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.