Consumer sentiment and perceptions towards crypto in 2023
A lot of things have changed since Bitcoin, the all-time leader of the crypto space and the coin that marked the birth of the crypto industry, was created: numerous other crypto projects emerged on the market, the Bitcoin price soared and declined numerous times due to successive bull and bear runs, crypto adoption increased considerably with more traders, investors, businesses and organizations jumping onboard, and governments around the world started working on developing regulatory frameworks for crypto.
All in all, the past few years have been extremely eventful for the crypto industry, even though not all the events were positive. But one thing that stayed the same throughout all the progress and craze is volatility. Due to their newness, decentralization and lack of regulation, digital currencies are susceptible to massive price swings prompted by a series of factors including supply and demand, competition, social media, the state of the world economy, geopolitical events, and last but not least consumer sentiment. In fact, the way people view and feel about crypto plays a key role in the evolution and adoption of crypto.
Therefore, it’s important to keep a close eye on this metric so we can gain a better understanding of the current condition of the crypto market and make predictions about what might happen in the future. A recent study conducted by Security.org provides valuable insights into how consumers’ perceptions and sentiment on crypto has evolved over the past months. The report collected data from 1,200 U.S. citizens regarding their perceptions, trust and plans for crypto usage.
Crypto awareness on the rise
The crypto industry took a massive hit in 2022 when prices plummeted across the board in the wake of the latest crypto winter. However, what was lost in value was gained in awareness. Intensive marketing campaigns, extensive media coverage and celebrity endorsements all contributed to the increasing popularity of digital assets. Compared to two years ago, when Security.org conducted their first report, awareness increased from 47% to 69%, proving that more Americans are now familiar with the concept of crypto.
Nevertheless, it seems that increased awareness does not translate into increased usage, as people’s trust in crypto has been impacted by the numerous scandals, bankruptcies and crashes that marred the industry. This caused the ownership rate to stagnate in recent months, in stark contrast with the upward trend that was registered two years back when the number of crypto holders doubled. According to statistics, almost one-third of US adults currently own crypto.
As for ownership spread, young males between the ages of 30 and 44 represent the largest demographic of crypto holders. These people are part of a generation that is tech-savvy, so they tend to have a better understanding of innovations. At the same time, they’ve been part of the active workforce for long enough to accumulate disposable income, so they can afford to invest in risky assets such as crypto.
The most probable explanation for the low activity levels in recent months is traders’ and investors’ tendency to sell their assets when market conditions are not favorable. Moreover, the bearish trend also scared away new investors from entering the playing field, as there were considerably fewer crypto buyers in 2022. With investment rates stalling, most digital currencies didn’t experience much price movement over the 2022-2023 period.
The relative stability in the price of established cryptocurrencies can also be interpreted as investors’ resolution to hold on to their assets, despite the market crash. This indicates that most crypto holders still harbor the hope that the market could recover at some point and a new bull run might help them get back on track.
People’s motivations and fears regarding crypto investments
Digital currencies propose a new paradigm for money based on decentralization, privacy, transparency, trustlessness, security, inflation protection, and fast and cost-effective transactions. While all these advantages contribute to crypto’s appeal, the majority of Americans choose to invest in cryptocurrencies for one reason and one reason only: the possibility of earning high returns.
Security.org’s study reveals that 56% of crypto holders view crypto as an asset they can use to diversify their investment portfolio, while 38% declared they’ve invested in digital currencies because they are interested in crypto technology. 25% of respondents said they think cryptocurrencies represent the future of money, and 24% of them were persuaded by someone they know to get into crypto.
Only 13% of crypto holders used digital currencies as a means of payment, to purchase goods or services online, and an even smaller percentage (3%) used crypto to transfer money abroad and avoid exchange fees. These figures show that crypto is still largely perceived and used as a store of value and a tool for speculation rather than an alternative form of payment.
People who have previously held crypto and are already familiar with the ins and outs of crypto trading are much more likely to continue to purchase and use crypto in the future, with one in five previous crypto owners intending to buy crypto this year.
Those who are not as eager to add crypto to their wallets or investment portfolios cite several sources of concern, including high volatility, lack of oversight, lack of trust in crypto exchanges most likely stemming from the resounding FTX collapse, the negative impact on the environment and cyberattacks. Addressing these issues could accelerate adoption and make crypto’s path toward mainstream acceptance a lot smoother.
Wrapping up
The crypto landscape looks a lot different today than it did one or two years back, which is to be expected from an industry that’s still growing through the normal growing pains. At the moment, the lack of stability, and the intense scrutiny from government bodies seem to be the most important issues dominating the crypto sphere and influencing consumers’ sentiment. But despite the challenges and the numerous causes of concern, there’s a stream of optimism running through the market that provides hope for crypto enthusiasts.
