Crypto Markets Unstable as Public Doubts Persist

Over the past year, Bitcoin, the most popular cryptocurrency, has increased in price by more than 100%. In the past five years, it has risen by more than 1,000%. However, despite these significant gains, public doubt about the reliability of these new financial assets persists.

A recent Pew Research Center survey found that although 88% of Americans are aware of cryptocurrencies, only 6% of those familiar with them are “extremely” or “very” confident that the current methods to invest in, trade, and use cryptocurrencies are reliable and safe. About 75% are “not very” or “not at all confident,” and 18% are somewhat confident.

The lack of confidence in cryptocurrencies likely stems from the instability of their prices. For example, Ethereum, the second most popular cryptocurrency, has increased by 91% in the past six months but has decreased by 17% in the past month. This volatility contrasts with assets like an S&P 500 index fund, which increased by 16% in the past six months and decreased by only 2.5% in the past month.

This uncertainty is also evident among those who have invested in cryptocurrencies. Of those who have invested at some point, 69% still own some cryptocurrency. Higher-income households, earning more than $131,500 annually, are more likely to retain their cryptocurrencies, with 78% still owning some, compared to 57% of lower-income households who are more likely to have sold their holdings.

The inclination to sell crypto assets is likely due to 45% of cryptocurrency investors reporting that their investments performed worse than expected, while only 15% said their investments did better than anticipated. However, most investors did not have significant amounts invested; 60% reported that their investments neither helped nor hurt their personal finances.

Despite the uncertainty, 17% of U.S. adults have invested in cryptocurrencies, according to the survey. This percentage is higher among men, at 25%, compared with 10% of women. Men aged 18 to 29 are the most likely to invest in cryptocurrencies, at 41%, while only 5% of women over 50 have made such investments.