Declining Crypto Interest Among US Investors: Insights from a FINRA Study

Interest in cryptocurrency has substantially decreased among US investors, with fewer individuals contemplating new investments, even as current ownership levels remain steady. This is according to a thorough study conducted by the FINRA Investor Education Foundation.

Key Takeaways

The interest in cryptocurrency among US investors is declining, with only 26% considering new purchases, a drop from 33% in 2021.
The rate of new investors entering the market has significantly slowed, particularly among those under 35.
Investors' willingness to take risks in their portfolios has decreased, with only 8% indicating they are open to high-risk investments.
Social media influences a growing number of young investors, with platforms like YouTube becoming crucial sources of investment information.
Concerns about investment fraud are on the rise, underscoring the importance of investor education and awareness.

Crypto Interest Fades Among US Investors as Risk Tolerance Declines: FINRA Study

The study highlights a larger withdrawal from high-risk investment strategies as market conditions and investor sentiment shift significantly from the surge experienced during the pandemic.

Based on survey data from 2,861 US investors holding non-retirement investment accounts, the Financial Industry Regulatory Authority found that while 27% of respondents continue to own cryptocurrency—unchanged since 2021—only 26% are considering additional purchases. This marks a significant decrease from 33% just three years ago.

Crypto US Investors FINRA Study - Awareness of crypto

New Investors Leave as Market Excitement Fades

The number of Americans entering the investment market has notably declined since the peak years of cryptocurrency.

Only 8% of the current investors started their investment journey in the past two years, a sharp decline from 21% who began during the two years prior to the 2021 survey.

This trend indicates that the surge in market participation seen during the pandemic has subsided, particularly affecting younger individuals.

For those under 35, participation rates dropped from 32% in 2021 to 26% in 2024, erasing the progress made during the market boom.

Crypto US Investors FINRA Study - Investment by age

Furthermore, investment rates among diverse demographics, including people of color and men, saw declines, reversing the gains observed just three years earlier.

The average age of investors who entered the market around 2019-2021 increased from 31 to 38, suggesting that many younger participants have exited entirely.

In addition to slower entry rates, investors have moved away from higher-risk investments. A significant 66% of those aware of cryptocurrency now consider it extremely or very risky, up from 58% in 2021.

Crypto US Investors FINRA Study - Crypto extremely risky

The proportion of investors holding penny stocks, REITs, private placements, and structured notes has all declined back to 2018 levels after briefly rising.

Declining Risk Tolerance Across All Groups

The willingness to take significant risks in investments has dropped from 12% in 2021 to just 8% in 2024, with the decrease most significant among younger investors.

For individuals aged under 35, those prepared to accept substantial risks fell from 24% to 15%, revealing a contradiction: 62% of this group still believe that high risks are necessary to achieve financial objectives.

“The latest FINRA Foundation research provides valuable insights into how market situations, technological changes, and generational shifts are altering investment profiles and reshaping investor behaviors,” stated Jonathan Sokobin, FINRA Foundation Chair and Chief Economist.

Despite a diminished risk appetite, younger investors continue to engage in high-risk activities that could result in substantial losses.

For instance, 43% of those under 35 trade options, compared to just 10% of investors aged 55 and older. Meanwhile, 22% engage in margin trading, whereas only 4% of older investors do.

Crypto US Investors FINRA Study - Option trading

Additionally, 13% of all investors reported buying meme stocks or trending investments, with this figure climbing to 29% among the under-35 cohort.

The decline in interest toward cryptocurrency appears particularly pronounced among new investors. Consideration of digital assets among those with less than two years of experience fell from 61% in 2021 to 48% in 2024, while more experienced investors showed a lesser decline.

Among investors under 35, interest in cryptocurrency dropped from 62% to 49%, in contrast to smaller decreases in older groups.

Rise of Social Media Influence Amid Investment Caution

The study revealed that social media “Finfluencers” are now guiding investment choices for 26% of all investors, becoming a significant resource, especially for those under 35, where 61% are influenced by them.

YouTube stands out as the primary platform for investment insights, with 30% of all investors using it, and 61% among younger individuals.

Crypto US Investors FINRA Study - Social Media Channels

Friend and family recommendations remain the leading source of information, utilized by 85% of investors under 35, surpassing guidance from financial professionals, which stands at 67%.

Concerns regarding investment fraud have slightly increased, with 37% of investors expressing fears about losing money to scams, up from 31% in 2021. Nevertheless, a significant 89% do not believe they have ever been targeted by investment fraud.

Crypto US Investors FINRA Study - fraud and scams

In a scenario where investors were offered a fraudulent opportunity promising “guaranteed, risk-free 25% annual returns,” half of the investors indicated they would consider investing. This highlights critical gaps in fraud awareness among investors.

Gerri Walsh, President of the FINRA Foundation, stressed the ongoing need for investor education, stating, “Investors still face gaps in knowledge and risk evaluation, which can expose them to costly mistakes. Ongoing investor education remains crucial.”

Interestingly, these findings contrast with broader trends indicating that cryptocurrency adoption is still on the rise, with separate surveys showing that over 50 million adult Americans now own digital assets. Moreover, some reports link the declining affordability of homeownership to a rise in crypto speculation among younger generations as they seek alternative means of wealth accumulation.