US investors are showing a reduced interest in purchasing cryptocurrency compared to previous years, a trend attributed to a decrease in risk-taking behavior, according to a recent study by the Financial Industry Regulatory Authority (FINRA).
While the percentage of individuals holding cryptocurrency remained stable at 27% between 2021 and 2024, the number of investors considering either increasing their holdings or making their first crypto purchase fell to 26% in 2024, down from 33% in 2021, FINRA reported.
The industry regulator's findings indicate that the proportion of investors exhibiting "high levels of investment risk" decreased by four percentage points, from 2021 to 2024, settling at 8%. This decline was most pronounced among investors under the age of 35, who saw a nine percentage point drop in high-risk investment behavior, bringing their participation down to 15%.
Historically, investment in cryptocurrencies tends to surge during periods of broad optimism within the macroeconomic landscape. However, current uncertainties surrounding interest rates, inflation, and the general economic outlook have likely prompted investors to seek out assets perceived as safer alternatives.
Crypto Perceived as Risky, Yet Important for Financial Goals
FINRA's comprehensive study, which surveyed 2,861 US investors between July and December 2024, supplemented by an online survey of 25,539 adults across different states, revealed that 66% of respondents identified crypto as a risky investment. This perception marks an increase from 58% in 2021.
Despite this heightened perception of risk, a significant portion of investors, one-third, expressed a belief that substantial risks are necessary to achieve their financial objectives. This sentiment was even more pronounced among respondents aged 35 and under, with 50% holding this view.
Approximately 13% of investors, including nearly one-third of individuals under 25, also reported engaging in the purchase of meme stocks and other viral investment trends.
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Slower Inflow of New Investors
The rate at which new investors are entering financial markets has also slowed down when compared to 2021. In the period leading up to 2024, only 8% of investors reported entering the market within the last two years, a notable decrease from 21% in 2021.
FINRA observed that the substantial influx of younger investors seen early in the pandemic, as documented in their 2021 National Financial Capability Study (NFCS), reversed its course as the pandemic subsided. This shift brought the proportion of US adults under 35 who invest back to levels seen in 2018.
Overall, FINRA's findings suggest a "modest trend towards more cautious attitudes and behaviors" when contrasted with the results of the 2021 survey.
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