FINRA research shows: U.S. investors' risk appetite is declining, and willingness to allocate to cryptocurrency is weakening

FINRA found that from 2021 to 2024, the number of people investing in cryptocurrencies remained stable, but the number of those considering buying more or investing for the first time decreased.

Author: Stephen Katte

Source: Cointelegraph

Article translation: Chang

According to a study by the Financial Industry Regulatory Authority (FINRA), as risk-taking behavior declines, U.S. investors are less enthusiastic about buying cryptocurrencies than in the past.

FINRA’s report on Thursday stated that the proportion of cryptocurrency investors remained unchanged at 27% from 2021 to 2024; however, the percentage of investors considering increasing their holdings or buying for the first time dropped from 33% in 2021 to 26% in 2024.

The industry regulator found that the group with a “high level of investment risk” declined by 4 percentage points to 8% between 2021 and 2024. The biggest drop was among investors under the age of 35, down 9 percentage points to 15%.

During periods of broad macroeconomic optimism, investment in cryptocurrencies typically surges, but uncertainty about interest rates, inflation, and the overall economy may prompt investors to turn to assets considered safer.

Cryptocurrencies labeled as high risk, but remain a key tool for achieving financial goals

FINRA’s research was conducted between July and December 2024, involving 2,861 U.S. investors, and included an online survey covering 25,539 adults across states. The study found that 66% of respondents labeled cryptocurrencies as a high-risk investment, up from 58% in 2021.

However, one-third of investors said they believe significant risk-taking is necessary to achieve their financial goals; among those aged 35 and under, this figure rose to 50%.

About 13% of investors (including nearly one-third of those under 25) also reported purchasing meme stocks and other popular investments.

Pace of new investors slows

Compared to 2021, the rate at which new investors are entering the market has also slowed. Only 8% of investors reported entering the market in the past two years up to 2024, compared to 21% in 2021.

FINRA pointed out: “The 2021 NFCS report noted a surge of young investors entering the market early in the pandemic; as the pandemic ended, this trend reversed, bringing the proportion of U.S. adults under 35 participating in investing back to 2018 levels.”

Overall, FINRA believes that compared to the 2021 survey, the results show a “moderate trend toward more cautious attitudes and behaviors.”