50% of U.S. Adults Get Cryptocurrency Advice from Social Media

50% of U.S. Adults Get Cryptocurrency Advice from Social Media

Though interest is increasing, many still at a loss about how cryptocurrency works
woman looking at her cryptocurrency app

Last year was a big year for cryptocurrency. In 2021, 68% of all people who currently own crypto made their first purchase of the digital currency. But despite its popularity, many consumers report being unsure of what crypto really is.

In its Crypto Perception Report 2022, blockchain technology company Huobi polled over 3,000 people about their views on cryptocurrency. Huobi's survey reveals that many people are uncertain or skeptical about crypto investing, and the majority have relied on informal sources to increase their understanding.

Crypto ownership breakdown

The allure of quick money is likely behind the significant increase in crypto purchases in 2021. Bitcoin's value repeatedly broke its own record highs last year, at several points exceeding $65,000 per coin. As of mid-January, it has dropped down below $45,000.

According to Huobi's survey, here's what ownership looks like today:

  • 28% of U.S. adults currently own cryptocurrency
  • 25% plan to buy cryptocurrency in the future
  • 46% of those who own cryptocurrency say they own $1,000 or less
  • 25% own between $1,000 and $10,000 worth of crypto

Meanwhile, according to Fed data, many adults are in a financially insecure position, with less than $400 saved for emergencies. More than half of all adults recently reported that they want to improve their finances in 2022, whether by doing things like saving money or paying off debt. Plans to buy crypto could be counterproductive to their goals.

The crypto knowledge gap

Despite owning or wanting to own cryptocurrency, 40% of survey respondents say they're "not very knowledgeable" or "not at all knowledgeable" about this asset class.

In the survey, respondents say their most relied upon source for information about cryptocurrency is not the news or a financial advisor, but rather the internet. According to the survey, 50% of respondents report that social media is where they get information on crypto, which makes it the leading online source, followed by web searches (41%) and YouTube or other content platforms (29%). In another recent survey, the majority of respondents also shared that they're turning to social media for financial advice.

But social media outlets and YouTube videos may not adequately inform consumers about financial matters, including how to buy, trade and sell cryptocurrency wisely.

For those interested in investing in cryptocurrency, it's important to keep these factors in mind, regardless of what influencers or other online personalities may say:

  • Cryptocurrency is a very volatile asset class. That means investors can see big gains, and big losses, all within a timespan as short as an hour.
  • Cryptocurrency is not well-regulated, but laws are likely to pass in the future that will change the way it's traded and taxed. Those laws could impact how much you ultimately earn on your investment.
  • Crypto crime is on the rise. Owner investments are not insured against theft by the U.S. government and billions of dollars worth of the currency were stolen in 2021 alone.

What does all of this mean? Cryptocurrency could present an opportunity to make a lot of money in a short period of time, but it could just as easily mean losing money fast.

As always, the best strategy for investing includes diversifying your assets and not investing more than you can afford to lose. Fortunately, some platforms now allow you to purchase crypto starting at as little as $1 (plus fees), so for a first-time buyer, investing doesn't have to break the bank.

Methodology: Huobi surveyed 3,144 U.S. adults ages 18 and over in mid-December 2021.