People see others getting rich on crypto, and “there’s a strong sense of FOMO.”
Why do people buy cryptocurrency? For the most part, it’s not because they think the digital assets are going to replace traditional currency and forever change the financial world.
Instead, people own crypto mostly because they just want to earn some cash.
When asked why they own cryptocurrency, 63% of crypto owners said that the major reason is that they simply want to make money, according to a new report from decision intelligence company Morning Consult.
To be fair, it’s not the only reason: 44% of the 830 crypto owners surveyed in June said a major reason for owning the asset was that they wanted to diversify their portfolios, and 43% said they believe crypto is the future of money. (Respondents were able to select more than one reason.)
Regardless of how they responded in the survey, crypto owners may be a bit disappointed right now. The crypto market’s value has tanked in recent months alongside the stock market, and bitcoin’s price — once as high as $68,000 per coin — is now hovering around $20,000 per coin.
Experts say the nosedive in prices comes as a result of a few factors: rising interest rates that are shaking all financial markets, forced selling by exchanges and an erosion of trust in crypto companies. The slump is especially startling after an impressive year for crypto in 2021, when the overall value of the market skyrocketed from $965 billion to as much as $2.6 trillion as investors took advantage of how easy it’s become to buy the digital currencies on trading apps, crypto exchanges and even Venmo.
Still, the downturn this year isn’t stopping people from wanting to replicate the stories they’ve heard about crypto millionaires.
“In that ‘I want to make money’ group of people, I think there’s a strong sense of FOMO,” or the fear of missing out on the next big thing, says Morning Consult financial services analyst Charlotte Principato.
We’ve seen huge crypto price spikes in the past, and true believers think it’ll happen again. “When you take that along with the lower barrier to entry for cryptocurrency than for traditional financial markets, it really is enticing,” says Principato.
Investors still want to buy cryptocurrency
Apparently, the fall of crypto prices this year also isn’t deterring investors from buying in.
Morning Consult also surveyed roughly 4,400 U.S. adults in general about whether they’re considering purchasing crypto in the next month and 23% said yes — a number that has held relatively steady in each month of 2022.
Crypto has entered the general consciousness, Principato says. “I think the purchasing intention has stayed high because people are thinking: Well maybe I’ll buy the dip, I’ll wait until it goes down and I’ll get in when the price is super low.”
As more and more people become interested in crypto, there is also a growing call for regulation: 21% of U.S. adults surveyed said cryptocurrencies should be more regulated than traditional financial assets like securities and investment funds. That number is up from 17% at the start of the year.
Investors who trust crypto “don’t necessarily trust the brands” involved in the market, Principato explains. For good reason. Recently, one of the largest crypto lenders, the Celsius Network, paused withdrawals, swaps and transfers between accounts, citing extreme market conditions. Prior to that, the crypto luna and its associated “stablecoin” terra collapsed, wiping out billions of dollars.
Still, when you combine the extreme hype around cryptocurrency with how easy it is to start investing (think spending as little as $1 on PayPal) and the (very) slight chance that you could get rich, it’s going to get people excited to buy, Principato adds.
“It’s kind of a recipe for ‘Why not?’”
More from Money:
Has Bitcoin Hit Bottom? Experts Weigh in on How Low Crypto Prices Will Go
7 Best Crypto Wallets of July 2022
5 Best Crypto Exchanges of July 2022
Mallika Mitra is a reporter at Money covering investing trends and cryptocurrency. Previously, she covered municipal finance at Bloomberg News and personal finance and retail at CNBC. She received her masteru2019s degree from the Craig Newmark Graduate School of Journalism at CUNY and bacheloru2019s degree from Kalamazoo College.
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