Crypto is Slightly Cooling for Millennials, But Don’t Count It Out Yet

Crypto Temperature Check: Room Temperature

While Bitcoin was only introduced in 2008, and remained a fringe currency for a number of years, today you would be hard-pressed to find a news article, scroll through TikTok or even talk to a friend without the crypto craze coming up. Over the course of the pandemic the influx of retail traders also created some crypto converts, especially among Millennials, who have been driving most of the crypto trading to date. However, the volatility lately has kicked off a bigger conversation on the importance of crypto and if the market is overhyped. A SoFi survey¹ recently found that only about a quarter of Americans think investments in crypto will grow over the next five years. About three-quarters of Americans think investments will stay the same or even decrease.

While this may be how people overall feel about crypto right now, how is that playing out in Millennials’ actual trading habits? Our first heat check report provides a look at how the crypto market is trending right now based on trading trends among SoFi’s members.

Trading Trends

As excitement for crypto has been ramping up over the last few years, it has undeniably exploded in the last year. While trading in January was up 38% from December 2021, it was down 58% year over year from January 2021, reflecting 2021’s huge surge in trading stocks and crypto at the start of the year.

The last several months have highlighted just how volatile the market can be, and how significant these swings can be from month to month. From November 2021 to December 2021, the amount invested in crypto dropped 30% before rising again in January. While this highlighted the volatility in the crypto market, this was still a big change compared to 2020. Year over year, investments in crypto rose 13% in November and 15% in December 2021 compared to the same periods in 2020.

Although the amount being invested in cryptocurrency has swung fairly significantly these past several months, the number of participants isn’t growing as quickly as it used to. Year over year, the number of crypto traders has grown 288% from January 2021 to January 2022.

Despite that impressive annual growth, there has been a slow, slight decline in new entrants over the past three months. Based on our client data, new crypto traders only grew 5% from December 2021 to January 2022. From November 2021 to December 2021, new crypto traders only grew about 7%.

Given the split between the crypto converts and doubters we’ve seen and declining prices, it may be that new traders are leveling out as people take a step back and consider what investments in cryptocurrency mean and how they fit into a diversified portfolio.

Crypto Trader Profile

Many think digital currencies are the purview of only Silicon Valley, and it is true the most number of crypto traders hail from California. In addition to the Golden State, the states where crypto is traded most often are:

  1. California

  2. Texas

  3. New York

  4. Florida

  5. Illinois

Additionally, while many believe crypto is for young, new investors, we found that these traders are actually pushing the big 4-0 – on average, our crypto traders are 39 years old.

Coins of Choice

While Bitcoin was the first coin crypto enthusiasts could buy, it now has to share the spotlight with a number of new choices in the market. Given the high cost of many of these coins right now, on average traders only hold 2 coins, but within that there is a mix of favorites. Based on coins traded by SoFi members who hold cryptocurrency in their portfolio, here are our members’ favorites coins over the last three months:

With volatility seems to be the name of the game right now, the coming months may prove a true first test for many of the new crypto investors. Keep an eye out for our next heat check report to see how the market is trending for Millennial investors in early April.

¹ YouGov conducted an online survey on behalf of SoFi’s Future of Money Institute among a nationally representative sample of n=1,161 adults. Fieldwork was executed from January 28th through January 31st, 2022. The figures have been weighted and are representative of all US adults (aged 18+).