Crypto: This Is Why Americans Are Giving Up On It.

Crypto: This Is Why Americans Are Giving Up On It.

Key Insights:

  • The rate of Americans holding crypto dropped from 11% in 2021 to 8% in 2022.
  • Issues like inflation, a hike in the federal interest rate, and regulation uncertainty are behind this plummet. 

Crypto was embraced globally and in the U.S. with open arms after the sector saw a major boom in 2021. Americans have been at the forefront of the adoption of web3 and crypto as the country became the centre stage for some of the biggest controversies.

Surprisingly, however, the once crypto-loving population now seems to be taking a skeptical stance. A recent report from the Economic Well-Being of U.S. Households stated that Americans holding or using digital tokens fell from 11% in 2021 to 8% in 2022.

Some have blamed this drop in popularity on the endless crypto winter, while others blame regulatory concerns, among other issues. Let us take a detailed look at why fewer Americans are holding digital tokens now, as opposed to then.

America and Crypto. Source: <a href='' target='_blank' rel='noreferrer noopener'>CoinMarketCap</a>
America and Crypto. Source: CoinMarketCap

Why Americans are Wary of Crypto

Here are reasons why Americans are wary in this economic winter:


As of last year, the inflation rate in the U.S. was at 8.26%. Although it has dropped to around 4.93% now, such a high rate can influence market sentiment and lead to price fluctuations in the market.

Although digital tokens are seen as a deflationary asset, the controversies with stablecoins could discourage people from hedging with them. Also, its overall volatility could put some people off.

The government could also set some policies – in a bid to curb inflation – that could affect it.

The rate hike by Fed

The director of investments at Illumen Capital, Octavio Sandoval, recently said, "When the Fed introduced restrictive monetary policies by increasing rates in 2022, this caused crypto to decline in valuation."

To combat the high inflation in the U.S., the FOMC hiked the interest rate nine times, increasing it from 0.25% to 5% within a year. Unfortunately, this inadvertently made banks borrow more, charge higher interest rates, and reduce demand for assets generally.

An interest rate hike causes a plummet in the value of these tokens.

Traditional investment

With the massive inflation and government policies affecting digital tokens, many Americans may use traditional investments. Some are Stocks and Bonds, Real Estate, Gold, etc. 

These traditional assets are less volatile and have a more extended history of being solid and safe assets of value.

Regulatory uncertainty

The SEC has been at loggerheads with numerous firms for many months. This has resulted in many of them being fined, affecting market sentiment.

Although the overarching aim of regulatory bodies is to enforce laws in the DeFi space, many controversies have stemmed from it. Unfortunately, all of these can prevent Americans from holding digital tokens.

Americans and crypto
Americans and crypto

Will Crypto Make a Comeback?

The declining number of Americans holding digital tokens points to a more significant issue than just the crypto winter. While the bear market is certainly a major factor, inflation, a hike in interest rates, and regulatory uncertainty can further discourage people from using these tokens.

Digital tokens
Digital tokens

Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information but will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.

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