The popularity of cryptocurrency is not what it used to be.
A Bankrate survey recently reported that faith in crypto, like Bitcoin and Ethereum, has declined at a rapid rate since 2021–when confidence in the digital market was at an all-time high. This survey questioned Americans from Generation X, Gen Z and baby boomers.
It is millennials, however, who seem to have lost the most faith in cryptocurrency.
So what happened? Well, the United States Federal Reserve raised interest rates to combat inflation, resulting in the market decline of cryptocurrency.
“It is a lot easier to be enthusiastic and believe in something when you see the value going up continually,” said Greg McBride, Bankrate’s CFA. “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.”
That they do.
Bankrate asked participants to describe their comfort level with investing in cryptocurrency. The percentage of those from Generation X who answered “very comfortable” went from 37% in 2021 to 21% in 2022 and baby boomers went from 21% to 11%.
And millennials went from 49% to 29%.
The Influence of Social Media
This drastic decline over the past year has many wondering what it is about cryptocurrency that piques the interest of so many millennials.
For starters, some millennials who still trust in crypto believe it will make them billionaires in the future. But the influence of social media plays a larger role.
A 2021 CreditCards.com survey noted that many Americans are aware that social media is not a reliable source yet 28% of Gen Z and 24% of millennials utilize it for financial advice. This isn’t surprising considering the average iPhone user touches his or her phone 2,617 a day, according to Business Insider’s Julia Naftulin.
Additionally, investors are now becoming even more uneasy about the future of crypto due to federal regulations. Lawmakers are presenting bills on Capitol Hill that involve the CFTC and the SEC.
All the issues arising with crypto point to one, seemingly obvious, realization: crypto is an investment. As with stocks and real estate, it should be treated as such.