Millions Of Americans Invest In Crypto: Who And Why?

Cryptocurrency is a relatively new asset class that has seen a surge in popularity in recent years. In the United States, the number of people investing in cryptocurrencies like Bitcoin and Ethereum has been steadily increasing, with surveys showing that around 11% to 16% of Americans have entered the crypto market. This equates to approximately 40 million individuals, with the majority of crypto investors being men and millennials.

16% of Americans have invested in crypto

According to a 2021 Pew Research Center survey, 16% of Americans have invested in, traded, or used cryptocurrency. This represents a significant increase from 2015, when only 1% of Americans reported having used Bitcoin. The survey also revealed that men aged 18 to 29 are the most likely demographic to invest in crypto, with 43% reporting that they have done so.

Demographics

While 16% of Americans overall have invested in crypto, this percentage varies across different demographic groups. The survey found that men are about twice as likely as women to invest in crypto, with 22% of men and 10% of women reporting that they have used cryptocurrencies.

Age also plays a factor, with younger investors being more likely to embrace crypto. Among investors between the ages of 18 and 34, 15% have invested in crypto, compared to 11% of investors between 35 and 64, and just 4% of investors aged 65 and over.

Knowledge and Perception of Crypto

The survey also revealed that the vast majority of Americans have heard at least a little about cryptocurrencies, with 86% of respondents saying they have some knowledge of crypto. However, only 24% of respondents said they had heard a lot about cryptocurrencies. Additionally, 69% of Americans claim to not understand how cryptocurrency works.

Despite the growing awareness of crypto, it is still considered a risky investment by many. In a CNBC survey, 60% of Americans said that investing in digital currency is highly risky, and only about 10% of Americans say they own any crypto.

Reasons for Investing

Despite the risks, many Americans are attracted to the potential for high returns offered by cryptocurrencies. Among crypto investors, 60% believe that virtual coins could provide long-term growth, and 44% believe there is a strong potential for high growth in a short period.

While only a minority of Americans have invested in crypto, the numbers are growing, and the demographics and motivations of crypto investors provide insight into the evolving landscape of cryptocurrency in the United States.

60% of Americans see crypto as a risky investment

Crypto's popularity as an investment

A survey by the Federal Reserve found that 11% of over 11,000 US adults surveyed between October and November 2021 bought or held cryptocurrency for investment purposes. This equates to approximately 40 million individuals. This is further supported by a Pew Research Center survey, which found that 17% of US adults have ever invested in, traded, or used a cryptocurrency.

Concerns about crypto's reliability and safety

Three-quarters of Americans are not confident that current ways to invest in, trade, or use cryptocurrencies are reliable and safe. This is reflected in the CNBC Make It: Your Money survey, which found that 60% of Americans believe investing in digital currency is highly risky, with another 26% believing it to be moderately risky. The volatile nature of the crypto market, highlighted by the loss of over $2 trillion since last year, has likely contributed to these concerns.

Generational differences in risk perception

Younger generations appear more willing to take a chance on crypto investing. While 38% of Gen Zers and 46% of millennials view crypto investing as highly risky, over 60% of Gen Xers and around 80% of baby boomers and the silent generation consider it to be high risk. This may be due to younger investors seeking quick financial gains and being more comfortable with the volatile nature of crypto.

Impact on personal finances

While some cryptocurrency users have reported gains, a plurality (45%) stated that their investments performed worse than expected. Additionally, around one-fifth of users said that their investments had hurt their finances, indicating that the potential risks of crypto investing can have tangible negative consequences.

Regulatory and environmental concerns

The crypto industry has faced increased regulatory scrutiny and concerns about its environmental impact. The collapse of major cryptocurrency exchange platforms, such as FTX, has also brought attention to the unpredictability and risks of the digital asset industry. These factors contribute to the perception of crypto as a risky investment option.

11% of Americans have crypto investments

According to a 2021 survey by the Federal Reserve, 11% of Americans have used cryptocurrency for investment purposes. This equates to roughly 40 million individuals. The survey, which polled over 11,000 US adults, found that the majority of crypto investors were high-income earners, with 46% making $100,000 or more and 29% earning under $50,000. Additionally, 99% of crypto investors had a bank account, and 89% of non-retired investors had retirement savings.

While crypto investing is gaining traction, it is still considered a risky venture. About 60% of Americans view it as a highly risky investment, and only about 10% of Americans say they own any form of cryptocurrency. The volatile nature of the crypto market was highlighted in 2022, with the market losing over $2 trillion and the collapse of major exchange platforms like FTX.

However, crypto investing is particularly popular among younger generations, with millennials constituting the largest group of crypto investors at 15%. This is followed by Gen Zers and Gen Xers at 12% each, and baby boomers and the silent generation at less than 5%. The appeal of crypto among younger investors may be attributed to social media exposure and a greater technological adeptness that makes navigating the crypto space easier.

When it comes to gender, crypto investing is more prevalent among men, with 16% having crypto investments compared to 7% of women. This gender disparity is also evident in the broader context of cryptocurrency usage, with men being about twice as likely as women to use cryptocurrencies.

Despite the risks and uncertainties associated with crypto, it continues to attract attention due to its potential for high returns and long-term growth. However, financial experts advise caution, recommending that individuals only invest what they can afford to lose and ensure they have met other financial goals before venturing into the volatile world of cryptocurrencies.

12% of Americans have used crypto

A 2022 survey from the Federal Reserve found that only 12% of Americans—or 40 million individuals—used cryptocurrency the previous year. This makes Americans the eighth-largest group of crypto adopters in the world.

The survey, which polled over 11,000 US adults, found that 11% of respondents had bought or held cryptocurrency for investment purposes, while 2% had used it for payments or purchases. A further 1% had used it to send money to friends or family.

These results suggest that, in the US, cryptocurrency is primarily viewed as an investment vehicle rather than a payment method. This is contrary to the narrative promoted by some crypto proponents, who argue that crypto is a payment vehicle that helps promote financial inclusion.

Indeed, the Federal Reserve survey found that crypto investors were mostly high-income adults. Among self-identified crypto investors, 46% made $100,000 or more, while 29% earned under $50,000. This is in contrast to the 2% who used crypto for transactions, who were more likely to be lower-income and unbanked.

Other surveys have found higher rates of crypto adoption in the US. For example, a survey from crypto exchange Gemini found that 20% of US adults reported owning cryptocurrency. However, data from the Gemini survey, as well as a study from blockchain analytics firm Chainalysis, also suggest that cryptocurrency isn't primarily used for payments in developed countries.

29% of Millennial American parents own cryptocurrency

Millennials are the biggest fans of cryptocurrency in America. A 2022 CNBC survey found that 15% of millennial respondents owned crypto, compared to 12% of Gen Zers and Gen Xers, and less than 5% of baby boomers and the silent generation.

Millennials are more likely to invest in cryptocurrency than any other generation. A 2021 Piplsay study found that 49% of millennials polled owned cryptocurrency, compared to 38% of Gen Xers and 13% of Gen Zers. A 2022 Investopedia survey found that 38% of millennials surveyed had some kind of cryptocurrency investment, with 59% of older and wealthier millennials earning at least $75,000 per year holding digital currencies.

Millennial men are about twice as likely to invest in cryptocurrency as millennial women. Of the millennials surveyed by Investopedia, 60% of men had investments in crypto, compared to 30% of women.

The reasons for the popularity of crypto among millennials include their familiarity with digital technology, the influence of billionaire Elon Musk, and the desire to take risks with their money. Millennials are "digital natives" who grew up with mobile technology and Web 3.0 (crypto) technology, according to Kurt Kumar of Rocketfuel Blockchain. They are comfortable with digital wallets, which are similar to those used in games like Fortnite and Minecraft.

Elon Musk's tweets about cryptocurrencies have also influenced millennials, with 41% of millennials and 35% of Gen Xers following his tweets closely, compared to 24% of Gen Zers. Half of the millennials polled by Piplsay said they made or considered making investments based on Musk's tweets.

Younger investors believe that cryptocurrency will offer the greatest returns on their investments over the next decade. They are willing to take on the higher risk of investing in crypto because they have a long investment horizon before retirement. As Whitney Hansen, a financial coach in Boise, Idaho, explains, "They [millennials] are far enough into their careers to have some disposable income for investments but have a long enough time horizon before retirement that they are willing to take on the higher risk."

Gen Z and millennials are more likely to turn to social media for financial advice and are more willing to take risks with their money, including investing in novel assets like cryptocurrency. A 2024 Policygenius survey found that 20% of Gen Zers and 21% of millennials owned cryptocurrency, compared to 14% of Gen Zers and 18% of millennials who owned stocks.

While millennials lead the way in crypto ownership, it is important to note that overall crypto adoption in the US is still relatively low. A 2022 Federal Reserve survey found that only 12% of Americans, or 40 million individuals, had used cryptocurrency in the previous year, mainly for investment purposes rather than as a currency.

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