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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. The popularity of cryptocurrencies such as Bitcoin has plummeted in 2022, particularly among their most fervent supporters – millennial investors – . Americans of all ages have seen their comfort level with cryptocurrency sink sharply over the last year, as these digital currencies have plunged in value at a dizzying pace. Overall, the number of Americans who said they were “very comfortable” or “somewhat comfortable” with cryptocurrencies in 2022 plummeted by more than 39 percent from 2021. And the numbers are even starker for millennials, where comfort levels dropped almost 42 percent. The decline of millennial investors’ comfort levels with cryptocurrency mirrors the steep declines in major cryptocurrencies such as and in 2022. From their all-time highs set in late 2021, Bitcoin has fallen more than 72 percent, while Ethereum has sunk 73 percent. In 2021, nearly 35 percent of Americans said they had some level with comfort investing in digital currencies, compared to about 21 percent in 2022. For comparison, older generations were less comfortable than last year, and they were less comfortable than younger investors: Millennials said they were “very comfortable” or “somewhat comfortable” with crypto at more than 49 percent in 2021 and that fell to almost 29 percent in 2022. Generation X showed comfort levels at almost 37 percent in 2021 and that fell to around 21 percent in 2022. Baby boomers showed comfort levels at more than 21 percent last year and slid to about 11 percent in 2022. Gen Z investors showed comfort levels at nearly 34 percent in 2022, but Bankrate didn’t specifically survey them in 2021.
, which is typically not backed by any hard assets or cash flows of an underlying entity, has fallen steeply as the Federal Reserve promised to aggressively raise interest rates to combat rising inflation and then followed through on that promise. In addition, some investors worry that further government regulation being proposed by the Biden administration, including a central bank digital currency, could derail the cryptocurrency market. “It is a lot easier to be enthusiastic and believe in something when you see the value going up continually,” says Greg McBride, CFA, Bankrate’s chief financial analyst. “But 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.”

Social media A poor source of financial information

Why are millennials and Gen Z so interested in cryptocurrency, when many financial advisors and other smart investors such as ? One reason may be the lack of quality financial information on social media, where the hype is limited only by an influencer’s imagination, especially when it comes to the poorly understood topic of cryptocurrency. A showed that social media platforms or influencers were the second most popular resource for Gen Z for financial advice, with 28 percent using it, behind only friends and family as a resource (53 percent). Millennials relied on social media at a similar rate (24 percent), compared to Gen X and baby boomers at 10 percent and 4 percent, respectively. But American adults acknowledged that social media was not a good source. They said that social media was the least trustworthy of their sources of financial advice. Just 21 percent said social media was trustworthy, while 65 percent said it was not trustworthy. Financial advisors were viewed as the most trustworthy (70 percent) of the sources cited, but advisors were consulted infrequently by Gen Z (only 16 percent), millennials (21 percent) and Gen X (20 percent). In contrast, about 29 percent of baby boomers consulted advisors.

Cryptocurrency presents major risks

Of course, it’s easy for those hyping cryptocurrency on social media, whether legitimately or not, to stoke interest with the promises of riches and flashy cars from trading. But the reality is that , a fact that can be impossible to discern amid the glitz. As always, with any investment – whether that’s stocks, funds, real estate or whatever – you need to understand what you’re investing in and how you can profit from it. In the case of cryptocurrency, because it generates no cash flow, traders must rely on “the greater fool theory of investing.” That is, they have to find someone even more optimistic – some would say foolish – about the investment that they are. So cryptocurrency trading is simply a game of trying to outguess your fellow traders about which way sentiment will swing. Investors are also fretting about how regulation by the U.S. federal government may affect crypto. The government is focusing on a number of issues, including stemming illicit transactions and other financial crimes, as well as protecting investors. It’s also considering creating a central bank digital currency, which would act as a “digitized dollar.” That move could hurt cryptocurrencies. Fed Chair Jerome Powell has said, “You wouldn’t need stablecoins; you wouldn’t need cryptocurrencies, if you had a digital U.S. currency.” And that means cryptocurrency is a high-risk game where you could lose most or all of your money, regardless of what age you are. Given the massive declines in cryptos in 2022, it’s little wonder that millennials – indeed, all major age groups – have become less comfortable with it. Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation. SHARE: Bankrate senior reporter James F. Royal, Ph.D., covers investing and wealth management. His work has been cited by CNBC, the Washington Post, The New York Times and more. Brian Beers is the managing editor for the Wealth team at Bankrate. He oversees editorial coverage of banking, investing, the economy and all things money.

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