Does age influence your likelihood of investing in cryptocurrency? The 2022 Investopedia Financial Literacy Survey asked 4,000 Americans about their investment habits and found that younger Americans are generally more bullish on the future of digital currency. However, there are plenty of skeptics, even among millennials (ages 26-41) and Generation Z (ages 18-25). Here's a closer look at the results, breaking down cryptocurrency investment views across several key demographics.
- Millennial, Generation X, and Generation Z investors are most likely to hold cryptocurrencies, while baby boomers are highly unlikely to invest in digital currencies.
- Cryptocurrencies are the most common type of investment for millennials, on par with stocks and investment funds.
- Younger investors believe that the greatest return on their investments over the next decade will come from cryptocurrency.
- Despite the enthusiasm, many investors across all age demographics believe that cryptocurrencies are "too risky" for their investment portfolios.
Millennials Are Most Likely to Invest In Cryptocurrency
Among all generations surveyed, millennials are more likely to invest in cryptocurrency. Of millennials surveyed, 64% indicated that they have investments, and 38% say that they have some kind of cryptocurrency investments. Of millennial investors, nearly 60% hold digital currencies. More specifically, 15% of millennials said that they own a non-fungible token (NFT), a digital asset relying on the same blockchain technology as cryptocurrencies.
Among millenials, older and wealthier individuals are more likely to invest in crypto. Of millennials earning at least $75,000 per year, 59% are digital currency holders, compared to 21% earning under $75,000. Millennial men are also about twice as likely to invest in cryptocurrency as millennial women.
"It makes sense that millennials are most likely to invest in cryptocurrency," said Whitney Hansen, a financial coach in Boise, Idaho. "They are far enough into their careers to have some disposable income for investments but have a long enough time horizon before retirement that they are willing to take on the higher risk."
"Boomers are right to be more cautious about riskier investments like cryptocurrencies, as they don't have as long of a timeframe to recover in the event of losses," Hansen said.
Gen X and Gen Z Are Equally Bullish
Gen X (ages 42-57) is next most likely to invest in cryptocurrency, with 28% of Generation X respondents stating that they own cryptocurrency investments. Generation Z is close behind, with 23% owning cryptocurrencies. For both groups, cryptocurrencies are the second most common investment, after stocks and ahead of mutual funds. Generation X and Z also believe that cryptocurrency will offer the most significant investment returns over the next decade, followed by stocks.
The big outlier is the baby boomer generation (ages 58-76). According to survey results, 43% of baby boomers hold investments, but just 6% of baby boomers invest in cryptocurrencies. For NFTs, baby boomers are extremely unlikely to invest, with 0% of baby boomers investing in NFTs. Baby boomers believe that stocks will offer the best returns, followed by mutual funds and real estate.
Cryptocurrency returns far outpaced other investments during a run-up in price from 2017 to 2021. However, several large, sudden price drops leave many hesitant to invest. Cryptocurrencies have a large community of vocal supporters. A recent spate of investment success coupled with advertising from cryptocurrency companies, including the recently renamed Crypto.com Arena (formerly Staples Center), is likely to keep investors engaged.
Enthusiasm and Self-Confidence Are High, But So Is Confusion
While many individuals are very optimistic about cryptocurrency, there are plenty of skeptics. Across age groups, more than 40% of respondents said cryptocurrency is too risky or too confusing.
"Baby boomers didn't grow up with computers, so they may not care to bother with this new asset class," said Michael Anderson, a financial advisor and Certified Financial Planner (CFP) at Marinantha Financial in Ventura, California. "Boomers have seen long-term success with stocks and investment funds. With retirement here or just around the corner, they may prefer to stick with their existing strategy rather than diversify into cryptocurrencies."
Even among millennials, 44% say that cryptocurrency is too confusing or risky for their money. Meanwhile, 58% of baby boomers say that cryptocurrency is too confusing. Less than half of millennials stated that they could explain how cryptocurrencies work, while only 5% of baby boomers can explain cryptocurrencies, and only 3% understand NFTs well enough to share how they work with someone else.
While there's a big mix of confusion and optimism, millennials stand out as the most enthusiastic for cryptocurrencies. Perhaps experience with the Financial Crisis in 2007-2008 and positioning as digital natives explains that zeal. More than half of millennials believe that cryptocurrency technology is accessible to everyone, and 49% call it "the future of finance."
Even with excitement from many younger investors, perceptions of high risk and challenging technologies remain a hurdle for further cryptocurrency adoption. Only time will tell if the optimists or skeptics are right when it comes to crypto.
The 2022 Investopedia Financial Literacy Survey quantifies U.S. adults’ understanding of their own financial literacy on a generational level. The survey was fielded via an opt-in, online self-administered questionnaire between Jan. 27 through Feb. 7, 2022 to 4,000 U.S. adults, 1,000 from each of the following generations: Generation Z (18-25), millennials (26-41), Generation X (42-57), and baby boomers (58-76). Quotas and data weighting were used to ensure race/ethnicity, gender, regional, and income representation among the total and within each generation. To learn more, see the full methodology.
Survey research and data analysis led by Amanda Morelli.