Cryptocurrency has had an inconsistent last several months, to say the least. After models pointed to all time highs early in the year, a massive summer crash sent the entire industry spiraling while also allowing new low values to invigorate fresh investment. And during all that time, emerging crypto lending platform, Celsius, went out of its way to remind everyone why they should still remain wary of the emerging fintech, when its leaders took millions of their investors’ and customers’ money and rode off into the sunset.
And despite ongoing CivicScience showing that consumers’ experience with cryptocurrency has remained remarkably flat since its initial explosion in 2021, the intense market volatility has finally begun to take its toll: over the last few quarters investor dissatisfaction with crypto has eclipsed satisfaction.
This data also heavily implies that despite the continued monetary growth of the cryptocurrency industry, and the increased visibility of the tech, the total number of investors isn’t getting any higher.
Despite this plateau, the mainstream financial and investment community has continued to go all-in on finding new ways to monetize the fintech among their consumer base, to largely mixed success.
Previously, CivicScience has looked into the various factors holding back higher adoption rates among the Gen Pop, with responses varying from security issues to financial concerns. And in addition to reflexive concerns related to the economic cycles of cryptocurrency, three major roadblocks have always held back new potential investors:
Volatility, perceptions of legitimacy, and the Gen Pop’s overall understanding (or lack thereof) of cryptocurrency continue to rank high in keeping the average investor out of the blockchain markets. The latter two concerns have ticked up over the last month, reflecting the overall depressive effect of the ongoing news cycle.
For cryptocurrency exchanges, related platforms, and other industries looking to gain from crypto growth, this ongoing lack of understanding leading to hesitance must be frustrating, as the industry has recently seen an unprecedented level of publicity.
But further CivicScience sheds some light on this lingering data point. According to recent polling, about half of those who are invested in cryptocurrency have done so because a friend or family member suggested it (26%) or of their own volition (24%).
So, despite the full-length, celebrity-studded Super Bowl commercials, and all the Elon Musks out there hawking the newest crypto trend, the effect among investors is minimal. In fact, the two lowest factors convincing someone to start crypto investing are endorsements from a celebrity (6%) or a financial professional (4%).
However, this does shift when looking at crypto investors by age bracket.
While the youngest investors are the most likely to be influenced by their friends/family, they are still twice as likely as the Gen Pop of investors to be drawn by celebrity endorsements.
A breakdown by income tells a somewhat similar story, but with even higher reliance on the advice of friends and family across all income brackets.
As above, ads have little effect on investment numbers, and neither do celebrity endorsements (though celebrities still outrank financial professionals across all income brackets except the highest). It seems as if taking the time to personally look into the financial asset assuages some from that adoption hesitance as a result of not understanding or questioning the legitimacy of the investment.
Most interestingly, however, is when we cross the reason behind initial investment against how closely someone follows trends in tech and electronics.
It turns out, those who closely follow trends in tech and electronics report the highest levels of being influenced by celebrity endorsements of the fintech, though this trend is likely a proxy for age.
So, why all the sudden celebrity endorsements of crypto (such as Kim Kardashian, Tom Brady, or Matt Damon), if the data shows they aren’t drawing many new investors, if any at all? That may be hard to pinpoint. It does, however, lead to legal complications when celebrities use their platforms to promote financial products they are personally invested in.
Kim Kardashian and NBA star Paul Pierce, and others, for instance, have recently faced SEC investigations for this “pump and dump” style of asset endorsement. The legality of this kind of financial asset endorsement is a fine line, and it turns out most of the Gen Pop doesn’t feel too great about it from an ethical standpoint.
And this sentiment is especially prominent among those who tightly follow the movements of the markets and economy (though notably, those who most closely follow the markets are both more likely to say the practice is ethical AND unethical).
This relationship reflects back to the Gen Pop’s overarching concern about the volatility and legitimacy of cryptocurrency. Not only does a celebrity’s endorsement not work effectively in bringing in new investors, it can actively court controversy and potential legal jeopardy.
However, while this sentiment is, overall, consistent across age groups, those crypto investors aged 18-24 are more likely to think celebrities’ activities with regard to endorsing crypto are perfectly ethical than any other age demographic.
So perhaps celebrity commercials for crypto haven’t made a huge dent in the market yet, but could as the youngest investors continue to grow in the market.
CivicScience will keep running observations on crypto trends as they shift along the financial landscape. Stay on top of consumers and the cryptocurrency market in real time with the CivicScience InsightStore.