The popularity of cryptocurrencies such as Bitcoin has plummeted in 2022, particularly among their most fervent supporters – millennial investors – according to a recent Bankrate survey. Americans of all ages have seen their comfort level with cryptocurrency sink sharply over the last year, as these digital currencies have plunged in value at a dizzying pace.
Overall, the number of Americans who said they were “very comfortable” or “somewhat comfortable” with cryptocurrencies in 2022 plummeted by more than 39% from 2021. And the numbers are even starker for millennials, where comfort levels dropped almost 42%.
The decline of millennial investors’ comfort levels with cryptocurrency mirrors the steep declines in major cryptocurrencies such as Bitcoin and Ethereum in 2022. From their all-time highs set in late 2021, Bitcoin has fallen more than 72%, while Ethereum has sunk 73%.
In 2021, nearly 35% of Americans said they had some level with comfort investing in digital currencies, compared to about 21% in 2022. For comparison, older generations were less comfortable than last year, and they were less comfortable than younger investors:
—Millennials said they were “very comfortable” or “somewhat comfortable” with crypto at more than 49% in 2021 and that fell to almost 29% in 2022.
—Generation X showed comfort levels at almost 37% in 2021 and that fell to around 21% in 2022.
—Baby boomers showed comfort levels at more than 21% last year and slid to about 11% in 2022.
—Gen Z investors showed comfort levels at nearly 34% in 2022, but Bankrate didn’t specifically survey them in 2021.
Cryptocurrency, which is typically not backed by any hard assets or cash flows of an underlying entity, has fallen steeply as the Federal Reserve promised to aggressively raise interest rates to combat rising inflation and then followed through on that promise. In addition, some investors worry that further government regulation being proposed by the Biden administration, including a central bank digital currency, could derail the cryptocurrency market.
“It is a lot easier to be enthusiastic and believe in something when you see the value going up continually,” says Greg McBride, CFA, Bankrate’s chief financial analyst. “But the real test of belief comes when the chips are down, and a lot of investors have realized they now feel differently about investing in cryptocurrency.”