The decade's most triggering comedy
The survey, taken from the end of November to the beginning of December, showed that roughly 60% of Americans see the risk of cryptocurrency investments as “high,” marking an increase from 45% in August of last year. Another 26% see cryptocurrencies as moderately risky, while only 10% say the assets carry “little” or no risk.
Cryptocurrency, a form of decentralized digital money that can be transferred between users’ virtual wallets, has garnered the skepticism of many regulators and investors over the past several years. Younger Americans are the most likely to invest in the assets: roughly 38% of Generation Z, defined by the survey as those below 25 years old, believe cryptocurrency investing is highly risky, while 80% of Baby Boomers and the Silent Generation, defined as those above 58 years old, said the same.
The sector has been particularly tumultuous over the past two months as FTX, a cryptocurrency exchange founded by Sam Bankman-Fried, experienced a liquidity crunch after users learned that sister trading firm Alameda Research allegedly pulled customer deposits from the platform to make bets. The companies filed for bankruptcy last month; Bankman-Fried, largely depicted by the media as a cryptocurrency wunderkind, now faces a criminal investigation from the Securities and Exchange Commission.
Younger Americans are also the most likely to hold digital assets; roughly 15% of Millennials, those between 26 and 41 years old, and 12% of Generation Z, said they own cryptocurrencies, while less than 5% of Baby Boomers and the Silent Generation said the same.
The overall cryptocurrency market has lost more than $2 trillion since last year, according to a report from CNBC. The price of bitcoin has fallen 64% since the beginning of this year, while the Dow Jones Industrial Index has fallen roughly 7% over the same period.
Institutional investors have placed capital behind blockchain projects but remain hesitant to bet on cryptocurrencies. JPMorgan Chase CEO Jamie Dimon recently raised concerns about “terrorism financing, tax avoidance, sex trafficking,” and other ways in which digital assets enable illicit activities. “Why do we allow this stuff to take place?” he asked, comparing cryptocurrency tokens to “pet rocks” and noting that contagion in the sector will have negligible impacts on the overall marketplace.
Cryptocurrency companies Voyager and Celsius declared bankruptcy earlier this year, while firms such as Genesis have indicated the looming possibility of bankruptcy. BlockFi, a lending platform, filed for bankruptcy days after FTX was rendered insolvent, scattering plans for Bankman-Fried to acquire the company.
Current FTX CEO John Ray III, the lawyer who represented plaintiffs after the collapse of Enron, said that the empire run by Bankman-Fried was the worst example of mismanagement he has ever witnessed. “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” Ray said in court documents. “From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”