Some Investors Still Think Crypto Will Make Them Rich
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Here's your Money Briefing for Friday, February 24th. I'm J.R. Whalen for The Wall Street Journal. During the pandemic, we saw cryptocurrencies like Bitcoin soar to record high after record high. Then in 2022, a series of sharp declines resulted in more than a trillion dollars in losses.
What happened to crypto prices during 2022 and why does it matter to investors?
That chased many crypto enthusiasts to the sidelines, but not all of them. Some so-called everyday investors are unfazed by the risks.
They feel that a bunch of the more traditional paths to building wealth are just closed off to them. The money that they make at their job is not enough for them to build wealth.
That's Wall Street Journal personal finance reporter Joe Pinsker. Coming up, we'll talk to him about who these individual investors are and why they continue to put money into crypto. That's after the break.
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Hey, Joe, thanks for being here.
Yeah, thanks for having me.
So Joe, who are these everyday investors that are still putting money into crypto? And why are they doing it?
Yeah, there's an interesting survey finding from last fall from the Philadelphia Fed, which found that about 39% of people who own crypto last October said that they were likely to buy more. So there are definitely people out there who are still doing this. Some of them actually happen to have lost a good amount of money from the crypto crash. last year in 2022, and are back at it nonetheless. So there's kind of a mix of people who have some experience with crypto before, and they think in general that because prices are so low right now, that now's a great time to buy because they think prices will shoot up again in the future. And in general, whether you're looking at now or in the past couple of years, there are some patterns that stand out about people who are more likely to use crypto.
Crypto use in general is higher among men than women. It's higher among adults who are under the age of 50 than over the age of 50. And in general, it's higher among Americans who are black or Hispanic or Asian than those who are white. That's all according to some Pew surveys that have come out over the past couple of years.
And you know, Joe, this isn't the first seemingly get-rich-quick type of investment that we've seen. How have market conditions influenced how people approach a risky investment like cryptocurrency?
Yeah, there's some interesting recent history here. Probably one of the big examples that stands out in somewhat recent memory is the dot-com boom of the late 1990s, which a lot of households got involved in. And I was talking with a sociologist named Adam Goldstein from Princeton, and he has done some really interesting research on how when people are exposed to one type of boom, they end up Yeah. And there's this interesting thread of his research and his observation that when people see booms happen around them in the economy, it makes them think that they're capable of getting in early on whatever's next.
Now, you've spoken to some financial planners about crypto with regard to their own clients' portfolios.
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