The adoption of Bitcoin and other cryptocurrencies as an asset class has been skyrocketing. In fact, both novice and professional investors have shown great interest in the emerging market. Now, some studies have suggested that adoption in the USA has slowed down when compared to lower-income nations. However, according to a new study and its survey responses, 11% of Americans may be currently investing in cryptocurrencies.
In fact, this placed crypto-assets as the 4th most preferred form of investment, ranking after real estate, stocks, mutual funds, and bonds.
While this might sound like great news, the CNBC study also found that almost half of those surveyed believe crypto is a high-risk investment. Also, another 31% found it to be moderately risky.
This is in line with the findings of a Gallup survey conducted earlier this year. It had found that 60% of Americans view crypto-investments as carrying high risks. Worth noting, however, that the figure was down from 75% in 2018.
This widespread view could be due to the novelty of the investors themselves. 65% of crypto-investors jumped onto the bandwagon only last year. Price volatility and appreciation over the last few months, especially in relation to the mainstream market, could be another reason.
A case in point is the latest bull run. It saw the king coin hiking by over 1500% between March 20-21, leading to its valuation going close to $65,000. However, the successive crash led to lows of below $30,000 before the market started to recover.
Interestingly, however, Bitcoin’s implied risk and volatility have hardly been a deterrent for traders as it was found that 34% of investors engage in monthly trades while a further 33% traded weekly. Additionally, it was found that 33% of the total crypto-investors had entered the space because it provided them with the ease of doing their own trades.
Clearly, many of these traders are capitalizing on the profitable opportunities its volatility presents.
Moreover, as can be seen from the chart above, Bitcoin’s volatility has started to come down as the asset’s supply has increased and more participants have entered the market. The BTC/USD 60-day volatility hasn’t crossed the 10% threshold since 2014, despite the price noting sharp movements over this time.
Regulatory uncertainty has additionally been a huge deterrent for investors as a lack of oversight and threats of crackdown might increase the risk associated with the asset class.
Even as cryptocurrencies continue to gain ground within the investment community, many more people could onboard the ecosystem if its implied risk is minimized through providing education and regulatory frameworks.