From the start of the latest “crypto winter” and decline in coin value to the ongoing “crypto crisis” and bankruptcies of exchanges, cryptocurrency isn’t off to a great start in 2023. The events of the last year, plus concerns over the Fed’s next move on interest rates and growing talk of regulation, are likely taking their toll on attracting new investors to the market.

The latest data from CivicScience tracking show that intent to invest in cryptocurrency has sunk to 9%, falling precipitously from a high of 14% in December of 2021. Investment continues to hold its own in the new year, but a growing percentage of U.S. adults say they are not interested in investing (at 72% for the month of January).

The gradual loss in interest likely wasn’t helped by events in Q4. A November poll found that the crash of FTX shook confidence for many, leading nearly 40% of potential investors and current investors to say they were less likely to invest in cryptocurrency. Thirty percent of investors said they (or someone they knew) were personally impacted by the collapse of the exchange.

As of January, nearly 1-in-3 crypto investors reported to CivicScience that they sold off more than half of their investments in the last few months – 17% cashed out the entirety of their holdings. Whether this was a direct response to the FTX collapse isn’t clear, but it continues a trend observed in the summer of 2022 when similar numbers reported selling off their investments amidst falling coin values.

However disrupted, the market is still holding on and 62% of investors say they haven’t traded in their assets. In fact, Bitcoin recouped a bit in value this month. Will that change if regulatory measures are imposed, some proposing that companies and exchanges be subject to laws governing banking institutions?

Poll results find the majority of the U.S. general population (54%) agrees that crypto markets (exchanges and companies) should be regulated by the federal government. The majority of the population is also not invested or planning to invest in crypto, largely because many (37%) do not see it as a legitimate type of investment, outweighing those who find it too volatile (19%) (source: CivicScience data from January). 

Among current investors, opinions are split but lean slightly in favor of regulation. Nearly 40% are pro regulation and 31% are against it, while 34% are undecided on the matter.

Those looking to invest in the future are the least likely to support regulation, with 42% being against the possibility and just 24% for it, suggesting that moves toward regulation could further deter new investment.

Stay on top of the ups and downs of this rapidly-evolving market through the consumer lens. Book a demo with CivicScience to learn more.