Why 63% of Investors Still Avoid Crypto: The Real Reasons Behind the Hesitation

Cryptocurrency has dominated financial headlines for years. Bitcoin has repeatedly set record highs, institutional investors have piled in, and governments around the world have scrambled to regulate an asset class that simply did not exist two decades ago. Despite all of this attention, a striking majority of investors still want nothing to do with it.

According to a 2024 survey by the Pew Research Centre, roughly six in ten Americans, specifically 63%, say they have little to no confidence that current ways to invest in, trade, or use cryptocurrency are reliable and safe. Three in ten adults say they are not at all confident. Another third say they are not very confident.

These are not fringe opinions from people who distrust all technology or all investing. Many of these sceptics are experienced investors who hold diversified portfolios of stocks, bonds, and real estate. They understand markets. They have simply chosen, often deliberately and for well-considered reasons, to keep crypto out of their portfolios.

This article examines those reasons in depth. It also looks at what crypto advocates argue in response, what the research says about risk and return, and how investors who do want exposure might approach the asset class more carefully. Whatever your position on crypto, understanding the debate makes you a better-informed investor.

The Pew Research Numbers: What the Data Actually Shows

The Pew Research Centre survey, conducted in February 2024 with over 10,000 adults, provides one of the most comprehensive pictures of American attitudes toward cryptocurrency available. The findings are worth examining carefully because they reveal nuanced patterns beyond the headline figure.

According to Pew’s analysis, the share of Americans who have used cryptocurrency has not grown in the past three years. This stagnation is significant. Despite enormous media coverage, record Bitcoin prices, and the launch of regulated spot ETFs, the actual adoption rate has plateaued. This suggests that the people most likely to adopt have already done so, and those who remain sceptical are not being moved by market performance alone.

The survey also confirms that scepticism cuts across demographic groups. While younger adults are more likely to have used or considered crypto, the 63% lack-of-confidence figure reflects adults across age groups, income brackets, and educational backgrounds. Financial anxiety about crypto is not a generational issue. It is a mainstream one.

Separately, crypto markets have continued to face headwinds. As reported by the Journal Record, Bitcoin fell as much as 36% from a record high in October, and companies that held Bitcoin as a primary treasury asset saw even more devastating losses. Strategy Inc, formerly MicroStrategy, dropped 54% from Bitcoin’s October peak and more than 63% from its mid-July level.

Reason 1: Extreme Volatility That Exceeds All Other Asset Classes

Volatility is the most cited reason for avoiding cryptocurrency, and the data fully justifies that concern. Traditional market volatility is measured by the VIX Index, which historically averages around 20. By contrast, as BizTech Lawyers’ crypto risk analysis notes, the Crypto Volatility Index has reached ten times the VIX and sometimes even higher. Daily price changes of 20% to 30% are not unusual in crypto markets.

Consider what this means in practice. An investor who places $10,000 in a diversified stock portfolio might see it drop to $8,500 during a bad market year, which is painful but survivable. The same $10,000 in certain cryptocurrencies could become $2,000 or less within a matter of weeks. This is not hypothetical; it has happened repeatedly with major coins, not just obscure tokens.

Furthermore, volatility in crypto does not follow the same patterns as volatility in traditional markets. Stock prices respond to earnings reports, interest rate decisions, and economic data. These factors are, at least in principle, analysable and partially predictable. Crypto prices respond to social media posts, regulatory rumours, celebrity endorsements, and sentiment shifts that have no fundamental basis.

How Crypto Volatility Compares to Traditional Assets

The following table illustrates the typical annual volatility range across major asset classes. These figures reflect historical averages and are for illustrative purposes only.

Asset Class	Typical Annual Volatility	Worst 12-Month Drawdown (Historical)	Recovery Time (Approximate)
US Stocks (S&P 500)	15-20%	-57% (2008-2009)	4-5 years
Government Bonds	3-5%	-10% (2022)	1-2 years
Gold	12-15%	-46% (1980-1982)	7+ years
Real Estate (REITs)	15-20%	-68% (2007-2009)	5-6 years
Bitcoin	50-100%+	-83% (2017-2018)	3+ years
Altcoins (average)	100-200%+	Often 90-99%	Many never recovered

As this comparison shows, even Bitcoin, the most established cryptocurrency, carries volatility several times greater than traditional equities. For investors who have spent decades building retirement savings in conventional assets, introducing this level of risk is not a casual decision.

Reason 2: The Regulatory Uncertainty Problem

Regulatory uncertainty is another major driver of investor hesitation. Cryptocurrency operates in a global, decentralised environment that existing financial regulations were not designed to govern. Different countries have taken dramatically different approaches, ranging from outright bans to enthusiastic embrace, and the rules keep changing.

In the United States, the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Financial Crimes Enforcement Network (FinCEN), and the IRS have all claimed jurisdiction over various aspects of crypto. Congress has introduced dozens of regulatory proposals in recent years, but as of 2024, comprehensive federal legislation remains elusive. The result is a patchwork of guidance, enforcement actions, and court rulings that leaves investors uncertain about the legal status of the assets they hold.

According to Pew Research, Congress is actively mulling regulations, while lawsuits against major crypto platforms continue to mount. This legal environment creates genuine risk for investors. A regulatory ruling that classifies a widely held token as a security could trigger forced selling, exchange delistings, and dramatic price drops practically overnight.

The Brookings Institution’s analysis of crypto risks highlights that, unlike traditional financial markets, crypto markets largely lack essential safeguards such as disclosure requirements, custody standards, and fraud enforcement. This regulatory gap has created an environment in which scams, market manipulation, and misleading marketing flourish.

International Regulatory Landscape

The international picture is equally fragmented. China banned crypto transactions outright. El Salvador adopted Bitcoin as legal tender. The European Union passed the Markets in Crypto-Assets (MiCA) regulation, creating a comprehensive framework. India has imposed steep taxes while allowing trading to continue. Australia treats crypto as property for tax purposes.

This fragmentation creates problems for institutional investors who need consistent regulatory treatment across jurisdictions. It also creates tax complexity for individuals who travel, live abroad, or trade on foreign exchanges. Resources like the IRS’s virtual currency guidance and the OECD’s Crypto-Asset Reporting Framework provide starting points for understanding tax obligations, but the landscape changes frequently.

Reason 3: Fraud, Scams, and the Lack of Investor Protections

Cryptocurrency markets lack the investor protections that most people take for granted in traditional finance. When a bank fails, deposits up to $250,000 are insured by the FDIC. When a stockbroker becomes insolvent, the Securities Investor Protection Corporation (SIPC) covers customer accounts up to $500,000. When a company misrepresents its financials, the SEC can pursue enforcement action.

None of these protections exists in crypto. If a crypto exchange collapses, as FTX famously did in 2022, customer funds may simply be gone. If a project founder deliberately misrepresents their technology, legal recourse is limited and often impractical given the international nature of many operations.

According to BizTech Lawyers’ analysis of crypto investor losses, the decentralised structure of crypto, while marketed as a feature, also removes the intermediary protections that traditional financial systems provide. Phishing attacks, backdoor breaches, and exchange hacks have cost consumers hundreds of millions of dollars. The Ronin Network blockchain lost $625 million to a single hack in March 2022. The Nomad Bridge platform lost $190 million in August 2022.

The Rug Pull Problem

Beyond exchange failures and hacks, retail investors face a uniquely crypto form of fraud known as a ‘rug pull.’ In a rug pull, developers create a new token, generate hype through social media and influencer marketing, attract investor money, and then abruptly abandon the project and withdraw all liquidity. The token’s value collapses to near zero, and investors have no practical recourse.

As BizTech Lawyers document, in one recorded example, $3.36 million was initially invested into a new token. Fifteen minutes later, the liquidity was pulled, and the value collapsed to essentially nothing. This happened within a single trading session, leaving investors with assets worth a fraction of their purchase price and no meaningful path to legal recovery.

The Brookings Institution notes that many retail participants enter the market later, with less reliable information, and are frequently misled by promotional hype or outright fraud. This creates a deeply asymmetric market where informed early participants profit while later arrivals absorb losses.

Reason 4: The FOMO and Hype Cycle That Traps Retail Investors

One of the most psychologically damaging features of the crypto market is its boom-bust cycle, which is driven heavily by the fear of missing out (FOMO). The pattern repeats with remarkable consistency: a price rise generates media coverage, media coverage attracts new investors, new money pushes prices higher, higher prices attract more coverage, and the cycle continues until it suddenly reverses.

According to BizTech Lawyers’ breakdown of contributing factors, encouraged by media and social media promotion, hype leads many investors, especially novices and those seeking quick profits, to invest without understanding the risks involved. As prices rise due to this influx of FOMO-driven money, more investors rush in, creating a self-fulfilling cycle that inflates a price bubble. When the bubble pops, the losses are borne primarily by those who entered last, which is almost always retail investors rather than institutional ones.

This asymmetry is not accidental. Brookings’ research shows a consistent pattern: during price crashes, large Bitcoin holders tend to exit early while retail investors absorb the losses. This dynamic creates a reverse-wealth effect in which wealth is effectively transferred from less affluent investors to wealthier ones.

Social Media’s Role in the Hype Machine

Social media platforms have supercharged the crypto hype cycle. Celebrity endorsements, influencer promotions, and viral memes have pushed millions of people into assets they did not understand, often at peak valuations. The subsequent crashes left many ordinary people with significant losses and a deep distrust of anyone promoting financial products online.

The Federal Trade Commission (FTC) has taken enforcement action against celebrities who promoted crypto without disclosing that they were paid to do so. The SEC has similarly pursued cases involving influencer-driven pump-and-dump schemes. Nevertheless, the regulatory response has lagged far behind the speed of social media promotion.

Investors who experienced significant losses during the 2022 crypto winter, when Bitcoin fell approximately 65% from its all-time high and many altcoins lost 90% or more of their value, are understandably reluctant to re-enter a market where they feel the odds are stacked against them.

Reason 5: Environmental Concerns and Ethical Objections

A growing number of investors cite environmental impact as a reason for avoiding certain cryptocurrencies, particularly those using proof-of-work mining like Bitcoin. The energy consumption required to maintain the Bitcoin network is genuinely enormous and well-documented.

Bitcoin mining consumes roughly as much electricity annually as some mid-sized countries. This energy use produces significant carbon emissions, particularly in regions where the power grid relies heavily on fossil fuels. For ESG-conscious investors and those with strong environmental values, this presents a principled objection that goes beyond purely financial risk considerations.

The Cambridge Centre for Alternative Finance maintains real-time estimates of Bitcoin’s energy consumption and carbon footprint. These figures help investors make informed decisions about the environmental impact of crypto investment. Ethereum’s 2022 transition from proof-of-work to proof-of-stake reduced its energy consumption by approximately 99.95%, offering a partial model for more sustainable blockchain operation.

Additionally, the broader crypto ecosystem involves significant electronic waste from mining hardware that becomes obsolete quickly. Concerns about mining operations in regions with weak environmental regulations add further complexity for investors who screen portfolios on ESG criteria through tools like MSCI’s ESG ratings or Morningstar’s sustainability ratings.

Reason 6: Complexity, Technical Barriers, and Self-Custody Risks

Crypto has a steep learning curve that deters many potential investors. Understanding wallets, private keys, seed phrases, gas fees, bridges, smart contracts, and the difference between layer-1 and layer-2 networks requires significant time investment. For most investors who simply want to put money to work and check in occasionally, this complexity is an unreasonable burden.

Furthermore, the consequences of technical mistakes in crypto are often irreversible. Sending funds to the wrong address, losing a private key, or interacting with a malicious smart contract can result in permanent, unrecoverable loss. In traditional finance, a bank transfer error can typically be reversed. In crypto, there is no customer service department and no appeals process.

Custodial solutions like exchanges remove some of this technical burden but introduce counterparty risk, as the FTX collapse made devastatingly clear. Self-custody removes counterparty risk but introduces the technical and physical risk of managing private keys. Neither option is without serious risk, and both require active management that many investors neither want nor have the expertise to provide.

The FTX Collapse: A Case Study in Counterparty Risk

The November 2022 collapse of FTX, once the world’s second-largest cryptocurrency exchange, crystallised many investors’ fears about counterparty risk. FTX held customer funds that were allegedly misused for trading activity by its affiliated hedge fund. When confidence collapsed and withdrawals spiked, the exchange could not meet customer redemptions.

Customers lost billions of dollars in funds they believed were safely held on a regulated platform. The founder was subsequently convicted of multiple counts of fraud and conspiracy. This event demonstrated that even large, well-publicised exchanges operating in regulated jurisdictions were not necessarily safe custodians of customer assets.

Resources like the Investor.gov’s crypto investor alert page, maintained by the SEC, provide ongoing updates on enforcement actions and investor alerts related to cryptocurrency fraud. The CFPB’s crypto guidance is another useful reference for retail investors assessing platform risk.

What Crypto Advocates Say in Response

It is important to represent the pro-crypto perspective fairly. Many of the concerns above are acknowledged by serious crypto advocates, even as they argue the asset class is worth including in a diversified portfolio at a measured allocation.

John D’Agostino, head of strategy at Coinbase Institutional, argued in a Journal Record analysis that the overall market is starting to look like traditional commodities or stocks, with regulated exchanges, safe custody options, and precise tools to bet on price direction, volatility, or steady income. His argument: if you are comfortable owning commodities, real estate, art, or gold, but crypto still makes you nervous, you may simply be working from outdated information.

Advocates also point to the dramatic expansion of regulated investment vehicles. The approval of spot Bitcoin ETFs in the United States in January 2024 brought regulated, custodied Bitcoin exposure to any investor with a standard brokerage account. Harvard University’s endowment, sovereign wealth funds in Luxembourg, Abu Dhabi, and the Czech Republic have built meaningful stakes in crypto assets, suggesting that serious institutional investors are moving beyond scepticism to cautious participation.

The Institutional Adoption Argument

Institutional adoption is one of the most significant recent developments in crypto. BlackRock’s iShares Bitcoin Trust became one of the fastest-growing ETFs in history after launch. Fidelity launched its own Bitcoin ETF. Vanguard, notably, chose not to offer these products, reflecting its ongoing scepticism. These divergent stances from industry giants reflect genuinely reasonable disagreement about the asset class’s place in a portfolio.

The entry of institutional capital brings improved liquidity, more rigorous custody standards, and greater market depth. It does not, however, eliminate the fundamental volatility or regulatory uncertainty that causes retail investors to hesitate. Institutions have risk management frameworks, legal teams, and balance sheets that allow them to absorb losses that would be devastating for individuals. The CFA

The CFA Institute’s research on digital assets provides an objective, institution-grade analysis of crypto’s role in portfolio construction. This type of evidence-based perspective cuts through both the promotional hype and the blanket dismissal to offer genuinely useful guidance for investors considering the asset class.

Crypto vs. Traditional Investments: An Honest Comparison

The table below compares cryptocurrency against traditional asset classes across the most relevant dimensions for a retail investor making an allocation decision.

Factor	Stocks (Index Funds)	Bonds	Real Estate	Gold	Cryptocurrency
Regulatory protection	Strong (SEC, FINRA)	Strong	Moderate-Strong	Moderate	Weak to Moderate
Historical return (long-term)	~7-10% annual real	~1-3% real	~3-5% real	~1-2% real	Highly variable; no stable track record
Volatility level	Moderate	Low	Low-Moderate	Moderate	Very High
Liquidity	High	Moderate-High	Low	High	High (but exchange-dependent)
Inflation hedge	Moderate	Poor	Good	Good historically	Unclear; contested
Fraud/scam risk	Low (regulated)	Very Low	Low	Low	High (unregulated sectors)
Tax simplicity	Clear rules	Clear rules	Complex but clear	Clear	Complex, evolving rules
Self-custody option	No	No	Yes (physical property)	Yes (physical)	Yes, but high technical risk

If You Do Want Crypto Exposure: How to Approach It Responsibly

Many investors do not fall into either the ‘never’ or ‘all-in’ camp. Instead, they are curious about crypto but want to approach it with the same discipline they apply to other investments. For this group, a structured, risk-aware approach is entirely reasonable.

Understand It Before Buying It

The most important step is education. Before allocating any money, understand what you are buying, why it might have value, and what specific risks apply. Investopedia’s comprehensive crypto guide covers the fundamentals clearly.CoinDesk’s learn section provides more depth on specific assets and technologies. Khan Academy’s blockchain course covers the underlying technology accessibly for non-technical learners.

Keep Allocation Small and Defined

Most financial advisors who include crypto in client portfolios allocate between 1% and 5% of total assets. This is small enough that a total loss, though painful, does not derail a broader financial plan. It is also large enough to provide meaningful upside if the asset class performs well.

Setting a firm maximum allocation before investing removes the temptation to increase exposure during a bull market rally. Write your allocation rule down and treat it as a policy rather than a suggestion. Investors who set limits in advance tend to make fewer emotion-driven decisions during periods of extreme market movement.

Use Regulated Investment Vehicles Where Possible

For most retail investors, buying Bitcoin or Ethereum through a regulated spot ETF in a standard brokerage account is significantly safer than managing crypto directly on an exchange or in a self-custody wallet. ETFs are held by regulated custodians, are insured against certain types of loss, and can be easily included in tax-advantaged retirement accounts.

Spot Bitcoin ETFs from BlackRock and Fidelity are now available through most major US brokers. These products eliminate self-custody risk, reduce exchange counterparty risk, and simplify the tax reporting process compared to direct crypto ownership.

Diversify Within Crypto If You Invest

Bitcoin and Ethereum represent the most established and liquid cryptocurrencies with the longest track records. Allocating to these rather than speculative altcoins or newly launched tokens significantly reduces the fraud and rug pull risk discussed earlier. Smaller, less established tokens carry proportionally higher risk of total loss.

Understand the Tax Implications

Crypto is treated as property for US tax purposes. Every taxable event, including selling crypto for cash, exchanging one crypto for another, and using crypto to purchase goods or services, triggers a capital gains or loss calculation. Accurate record-keeping is essential and legally required.

Tools like CoinTracker and Koinly automate crypto tax reporting by connecting to exchanges and wallets. These tools are worth using from the very first transaction to avoid the considerable complexity of reconstructing records retrospectively. The IRS’s virtual currency FAQs should be reviewed before and after any taxable crypto activity.

The Bottom Line: Is Scepticism Rational?

Yes, absolutely. The 63% of Americans who lack confidence in crypto’s safety and reliability are not making an irrational or uninformed judgment. They are responding to a genuine set of risks that the data confirms: extreme volatility, regulatory uncertainty, significant fraud risk, limited investor protections, and a market structure that historically disadvantages retail participants.

This does not mean crypto has no place in any portfolio. It means the decision deserves the same careful analysis as any other investment decision. The promotional excitement that surrounds crypto, amplified by social media, celebrity endorsements, and stories of early adopters making life-changing returns, creates pressure to invest that should be recognised and resisted unless it is backed by a genuine understanding.

As Brookings concludes, retail investors are the most vulnerable participants in this market. They lack the resources, information, and financial resilience that institutional participants bring. Protecting yourself means educating yourself, setting strict allocation limits, using regulated vehicles, and maintaining the healthy scepticism that the data shows most Americans already possess.

Ultimately, financial calm comes from investing in things you understand, in amounts you can afford to lose, through channels you can trust. Applying these principles to crypto is neither excessive caution nor outdated thinking. It is exactly the disciplined approach that produces long-term financial success across every asset class.

Quick Reference: Questions to Ask Before Investing in Crypto

Question	Why It Matters	Where to Find the Answer
Do I understand what I am buying?	Uninformed investing amplifies all other risks	Investopedia, CoinDesk, CFA Institute
What percentage of my portfolio will this represent?	Limits the downside to a survivable level	Your financial plan or advisor
Am I using a regulated investment vehicle?	Determines the level of investor protection	SEC.gov, your brokerage platform
How will I handle a 50-80% drawdown?	Tests emotional readiness for real volatility	Your written investment policy
Have I reviewed the tax implications?	Crypto tax obligations are complex and enforced	IRS.gov, CoinTracker, Koinly
Am I investing with money I can afford to lose?	Crypto is speculative; only risk discretionary capital	Your monthly budget and emergency fund status
Am I being influenced by FOMO or social media hype?	Hype-driven buying consistently produces the worst outcomes	Your own honest self-assessment

Spend some time for your future. 

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Disclaimer

This article is for informational and educational purposes only and does not constitute financial, investment, legal, or tax advice. Cryptocurrency is a highly speculative asset class. Past performance is not indicative of future results. Individual financial circumstances vary significantly. Always consult a qualified financial advisor, tax professional, or attorney before making investment decisions involving cryptocurrency or any other financial instrument. The author and publisher accept no liability for financial losses or other outcomes arising from decisions based on information in this article.

References

[1] Pew Research Centre. ‘Majority of Americans Aren’t Confident in the Safety and Reliability of Cryptocurrency.’ Available: https://www.pewresearch.org/short-reads/2024/10/24/majority-of-americans-arent-confident-in-the-safety-and-reliability-of-cryptocurrency/

[2] Journal Record. ‘Crypto Investors Show Caution, Shift to New Strategies After Crash.’ Available: https://journalrecord.com/2025/12/17/crypto-market-bust-investor-caution/

[3] Brookings Institution. ‘Protecting the American Public from Crypto Risks and Harms.’ Available: https://www.brookings.edu/articles/protecting-the-american-public-from-crypto-risks-and-harms/

[4] BizTech Lawyers. ‘Protecting Crypto: 6 Factors Contributing to Investor Loss.’ Available: https://www.biztechlawyers.com/legal-articles/protect-your-crypto-investments

[5] Chainalysis. ‘2025 Crypto Crime Report Introduction.’ Available: https://www.chainalysis.com/blog/2025-crypto-crime-report-introduction/

[6] U.S. Securities and Exchange Commission. ‘Investor Alerts on Cryptocurrency.’ Available: https://www.investor.gov/additional-resources/spotlight/investor-alerts-bulletins-notices-about-cryptocurrency

[7] Consumer Financial Protection Bureau. ‘What You Should Know About Cryptocurrency.’ Available: https://www.consumerfinance.gov/about-us/blog/what-you-should-know-about-cryptocurrency/

[8] Internal Revenue Service. ‘Virtual Currency FAQs.’ Available: https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactions

[9] Federal Trade Commission. ‘Cryptocurrency Topics.’ Available: https://www.ftc.gov/news-events/topics/cryptocurrency

[10] Cambridge Centre for Alternative Finance. ‘Cambridge Bitcoin Electricity Consumption Index.’ Available: https://ccaf.io/cbnsi/cbeci