Millennial investors are becoming less comfortable with cryptocurrency
Cryptocurrency’s popularity among American investors is on the decline.
By 2022, only about 21% of Americans feel comfortable investing in cryptocurrency, according to Bankrate’s September survey. That is down from 35% in 2021.
Although comfort levels fell among investors across generational lines, the decline was steepest among millennials. Nearly 30% of US investors between the ages of 26 and 41 feel comfortable in 2022, compared to nearly 50% in 2021.
The decline is not surprising, considering that nearly $2 trillion has been wiped off the entire crypto market since November 2021.
“Traders of any asset are fans of good weather, and with major cryptocurrencies like Bitcoin and Ethereum down more than 70% from their all-time highs, it’s no wonder the shine has come off these coins,” James Royal, lead reporter at Bankrate, tells CNBC Make It.
“Decreasing crypto prices are not helping the cause of attracting more people to crypto,” he adds.
Initially, many young investors’ interest in crypto was due to the “lottery ticket atmosphere” where it seemed like you could make a lot of money quickly, says Royal: “A lot of young investors don’t understand what they’re buying, but they can see the price going up, and then they want in.”
However, prices of popular digital currencies such as bitcoin have struggled to reach 2021 highs. Bitcoin has traded between $18,000 and $25,000 since June, down from record highs above $65,000 in November 2021.
“The only way you can make money off of it is by reselling it to someone who is more optimistic or foolish than you,” says Royal. For this reason, he adds, crypto should not be considered a traditional investment.
“It’s more like you buy an arcade token and hope someone will pay you more for it later. It’s for this reason that legendary investors like Warren Buffett don’t want anything to do with cryptocurrency,” he says.
Cryptocurrency is considered to be a highly volatile asset that is subject to unpredictable fluctuations in price. Financial experts usually advise against investing more money in cryptocurrency than you are willing to lose, as there is no guarantee of making a profit.
If you are looking for a less speculative investment, you have many proven options: “Buying an S&P 500 index fund regularly and then holding on through thick and thin has built the fortunes of many American millionaires,” says Royal.
“Sure, someone wins the lottery, but wealth is built over time and it is achievable for those who can be disciplined investors,” he adds.
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