From the start of the recent “crypto winter” and coin value decline to the ongoing “crypto crisis” and stock market crashes, cryptocurrency 2023 has not got off to a good start. The events of the last year, along with concerns about the Fed’s next rate move and increasing talk of regulation, will likely take their toll in attracting new investors to the market.
The latest data from CivicScience Tracking shows that intent to invest in cryptocurrency has dropped to 9%, falling precipitously from a peak of 14% in December 2021. Investment continues to hold up in the new year, but a growing percentage of US adults say they are not interested in investing (at 72% for the month of January).
The gradual decline in interest rates was unlikely to be helped by fourth quarter events. A November poll found that FTX’s crash shook the confidence of many, leading to nearly 40% of prospective and current investors saying they were less likely to invest in cryptocurrency. Thirty percent of investors said they (or someone they knew) were personally affected by the stock market crash.
In January, 1 in 5 crypto investors told CivicScience that they have sold more than half of their investments in the past few months — 17% have cashed out their entire holdings. Whether this was a direct response to the FTX collapse is not clear, but it continues a trend observed in the summer of 2022 when similar figures reported selling their investments amid declining coin values.
Disturbed however, the market is still holding up and 62% of investors say they have not traded their assets. In fact, Bitcoin has regained some value this month. Will that change when regulatory measures are imposed, some of which suggest corporations and exchanges are subject to banking institution laws?
Poll results show that a majority of the US general population (54%) agrees that crypto markets (exchanges and businesses) should be regulated by the federal government. The majority of the population is also not invested in crypto or plans to invest in crypto, mainly because many (37%) do not see it as a legitimate way of investing and outweigh those who consider it too volatile (19%) (Source: CivicScience data as of January).
Opinions are divided among current investors but are prone to regulation. Almost 40% are in favor of regulation and 31% against, while 34% are undecided on the issue.
Those looking to invest in the future are the least supportive of regulation, with 42% opposed to the option and just 24% in favor, suggesting moves towards regulation could further discourage new investment.
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