What Investors Think About Cryptocurrency

Cryptocurrency has had a bad time in recent months with the £5 million Solana hack, Bitcoin shedding 50 per cent of value and leading exchange Coinbase sacking more than a thousand workers.

The feel-good factor from earlier this year has evaporated for serious and casual investors alike, leading to nearly half of crypto enthusiasts cashing in their coins and tokens.

So, if you are considering moving into cryptocurrency, you can catch up on the latest thinking among investors from the American think-tank Civic Science.

The study asked almost 4,000 investors for their opinions about the industry and their investments – and here’s what they had to say.

Has Investor Interest Peaked In Cryptocurrency?

Twice as many investors believe cryptocurrency has peaked in popularity, resulting in a massive dip in value.

One in five disagreed, while 45 per cent felt crypto’s time had passed, and 35 per cent didn’t know.

Bitcoin was worth $43,000 at the start of May and has dropped to $23,000 in a few weeks.

However, researchers pointed out the negative sentiment was a little more prevalent among those who had not invested in stocks and shares.

“Perhaps regular investors are used to financial swings and assume one of the most volatile financial assets available will just bounce back up eventually, whereas the observers on the outside assume differently,” says the report.

“However, that perception may not be unfounded. And those who follow tech trends reflect similar numbers.”

What Investors And Non-Investors Say About Crypto Popularity

Crypto investors and non-investors are evenly split on the popularity of cryptocurrency, although more non-investors have made up their minds than investors.

PeakedNot sureNot peaked
Source: Civic Science

Consumers following technology news were asked the same question to compare their thoughts about the popularity of cryptocurrency with consumers who don’t follow the industry.

PeakedNot sureNot peaked
Tech trend followers42%35%23%
Tech trend non-followers51%33%15%
Source: Civic Science

The conclusion, says Civic Science, is general consumers think the cryptocurrency gravy train has hit the buffers, while those that follow tech trends think the opposite.

“While this parallel sentiment is understandable, something that doesn’t quite match up with it is why the general population is hesitant to invest in crypto in the first place. Namely, concerns over legitimacy have skyrocketed since late May,” says the study.

Why Don’t People Invest In Cryptocurrency?

The Civic Science research was carried out in July 2022 after some difficult weeks for the crypto industry.

The exchange Celsius filed for bankruptcy owing $4.7 billion and has yet to explain a $1.2 billion hole in the balance sheet to more than 100,000 creditors. Celsius joined another exchange filing for bankruptcy – Voyager Digital.

Voyager went down over dealings with Three Arrows Capital, which is also in bankruptcy.

The market chaos triggered by the filings has seen the price of Bitcoin slump from $43,000 at the start of May to $23,000 at the beginning of August.

“Those who think cryptocurrency is past its prime, do tend to think that it’s because it’s somehow lost its legitimacy over the last few weeks, and not primarily because of its volatility,” says Civic Science.

Large numbers of consumers complained they could not invest in cryptocurrency because they don’t understand the market or don’t know how to hook up with a digital currency.

Reason for not investingPeakedNot sureNot peaked
Don’t understand crypto38%41%21%
Market is too volatile50%36%15%
Crypto lacks legitimacy58%30%12%
Don’t know how47%42%11%
Don’t have the money35%31%34%
Source: Civic Science

“Perhaps the average market observer sees legitimacy linked to stability. The coming weeks will demonstrate how the crypto market, and its major investors, will respond to its first significant downswing,“ said the report.

Have You Bought Cryptocurrency?

Market research firm YouGov tracks how investors view cryptocurrency in the UK.

Around 2,000 people are asked if they have bought cryptocurrency. The results show Bitcoin and other cryptos are slowly increasing in popularity.

In August 2019, when the tracker started collecting data, only three per cent of consumers had purchased crypto like Bitcoin or Ether. Since then, the number has slowly risen to 10 per cent.

Asked have you or someone you know ever bought cryptocurrency, the results over time are:

Aug 2019Jan 2020Aug 2020Jan 2021Aug 2021Jan 2022Aug 2022
No purchase77%73%74%75%67%66%67%
Know someone who has bought14%16%14%14%21%20%21%
Bought crypto3%4%%4%5%8%9%8%
Source: YouGov

Another YouGov tracker looks at the appeal of investments. Cryptocurrency performs poorly with investors placing the industry at the bottom of their pile of preferences. Just seven per cent of investors voted for cryptocurrency, well behind the most popular – buy-to-let property (31 per cent) and cash (27 per cent).

Cryptocurrency FAQ

What is cryptocurrency?

Cryptocurrency is a payment system based on two key ideas – firstly, the data is encrypted and tamper-proof, which covers the crypto; while currency covers the payment end of the system that only exists in a digital format.

Under the hood, cryptocurrencies run on a blockchain, a peer-to-peer computer network that maintains a ledger confirming transactions and ownership of individual coins and tokens.

How many cryptocurrencies are there?

About 3,000 cryptocurrencies populate the internet, but some are much more popular than others.

Bitcoin is the leading crypto, worth about $23,000 a coin and with about two-thirds of the market share. Other popular cryptos are Ether, Litecoin and Ripple.

What is an NFT?

NFT is short for non-fungible token. Non-fungible means the token is digital. NFTs can be sound clips, images or short videos and can change hands for considerable money. The world record price is $69 million for a single NFT by crypto artist Beeple.

What can I buy with cryptocurrency?

Some major retailers accept payment in Bitcoin or Ether, but the process is clunky. Due to the system’s speed, bitcoin transactions can take hours or days to verify, and switching from British Pounds or US Dollars to crypto involves fees that can make a purchase expensive.

How safe is my crypto?

Like your home or car, your crypto is as safe as the security measures you apply. The history of crypto is littered with scams and hacks that have cost victims millions of dollars. Most of the losses derive from hackers stealing crypto from exchange accounts, so keeping your coins and NFTs in a secure offline vault means no one can touch them unless you are connected to the internet.

Why should I invest in cryptocurrency?

Hedge funds and institutional investors buy cryptocurrency to diversify their portfolios, but most hold less than five per cent of their funds in digital currencies. Crypto is a high-risk/high-reward investment, and as long as you research the industry and understand the market, it’s a valuable option.Related Information

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