What Really Drives Americans to Invest in Crypto?

Crypto prices have been struggling ever since Bitcoin (BTC ) topped out at about $126,000 in October 2025. As the BTC price lost more than 50% of its value, people lost interest, and adoption took a hit. But adoption in the US has been making a comeback this year, as noted by a Deutsche Bank (DB) survey of retail consumers (DB ).

After declining steadily since July 2025, US crypto adoption rates recovered in March to 12%. Demographically, men and higher-income households are leading crypto adoption, though gradual gains are also noted among women and lower-income investors.

The survey by the German lender spanned 3,400 retail consumers across the US, UK, and EU. In the UK, where younger consumers showed the fastest growth in participation, adoption dipped to 9% but remains higher over the long term, while Europe is holding steady at 7%, the analysts wrote in their report earlier this year.

Among the assets, Bitcoin remains the favorite, with roughly 70% of crypto investors across regions holding the largest cryptocurrency, far exceeding ownership of stablecoins such as USDT and USDC. Additionally, 69% of US respondents cited Bitcoin as their preferred investment for the future.

But given the lackluster performance of crypto compared to traditional assets, investors are preferring gold and the S&P 500 over cryptocurrencies, though the gap is narrow in the US, where investor preferences are more evenly split across the three.

As TRM Labs noted, global retail crypto activity dropped from $1.1 trillion in Q1 2025 to $979 billion in Q1 2026, following a 23% decline in Q4 2025. This back-to-back decline was the steepest since the 2022 bear market, driven by reduced retail participation amid a global risk-off environment.

“This pattern is consistent with how crypto has behaved across recent market cycles,” stated the report, explaining that Bitcoin returns align “with broader macro regimes, with strong performance during periods of liquidity expansion and sharp drawdowns during risk-off episodes,” and the back-to-back drawdowns in Q4 2025 and Q1 2026 fit this pattern, “reinforcing that retail crypto activity is closely tied to macro conditions rather than purely crypto-native dynamics.”

Amid this, the US maintained its top spot, with transaction volume nearly three times that of the next largest market. The US is followed by South Korea, Russia, India, and Turkey.

The Q1 2026 Global Crypto Adoption Index report further noted that crypto adoption recorded the “sharpest contractions” in developed markets with stable fiat currencies and competitive domestic capital markets.

While rising opportunity costs and risk-off sentiment reduced speculative appetite in the US (-11%), the UK (-17%), Germany (-25%), and South Korea (-28%), demand for crypto increased, remained flat, or saw only a small drop in emerging markets where constrained monetary policy or capital controls limit alternatives.

Demand for crypto in emerging markets isn’t driven by speculation but by need, functioning as a store of value and thus being less sensitive to the global liquidity cycle.

When it comes to overall crypto adoption, India ranks first, followed closely by the United States, per the 2025 Chainalysis Global Crypto Adoption Index. In the US, adoption is becoming increasingly institutional, with the region processing more than $2.2 trillion in value.

Broadly, over 70 million American adults, or about 30% of the US population, now own crypto, up from 15% in 2021 and 27% in 2024, per Security.org.

Source: Security.org

One in three crypto holders is between the ages of 30 and 44. For the second consecutive year, Bitcoin was the most popular cryptocurrency, along with Ethereum (ETH ), Dogecoin (DOGE ), and Solana (SOL ).

According to the data, those who don’t own any cryptocurrency cite its volatility as the primary reason. While crypto’s high volatility is the main deterrent, other concerns include the lack of government or bank protection, the risk of cyberattacks, difficulty trusting crypto exchanges, and the potential for loss of access.

Security has always been people’s main concern with crypto, so it comes as no surprise that it continues to keep investors away from the asset. But what about the reasons for investing in crypto? Why do Americans actually invest in the asset?

Is it financial sophistication, or a simple appetite for risk? Is it distrust of banks, or the comfort with digital platforms produced by years of app-based investing? The evidence, according to a new academic study on US households, points to a mix of all of these.

Understanding Americans’ Participation in Crypto Markets

Close to two decades after Bitcoin’s launch, cryptocurrencies have moved from a fringe experiment into a mainstream asset, reaching a market capitalization of $4.34 trillion at its peak in October 2025, and are fast becoming a part of American household finance.

But while demand for crypto as an asset class continues to rise, what drives this adoption remains insufficiently explored in the literature.

To address this, researchers from the Department of Economics and Finance, City University of Hong Kong, published a study titled ‘Determinants of Household Crypto Asset Market Participation: Evidence from the United States¹‘ to provide an unusually detailed view of household-level mechanisms.

The researchers analyzed data from the 2021 National Financial Capability Study (NFCS), a large-scale survey of US household investors. They began with 27,118 adults in the broader NFCS State-by-State Survey and constructed an investor sample of households that hold non-retirement investments and are primary or shared household financial decision-makers.

After further narrowing the sample to respondents who had at least heard of crypto and accounting for missing observations in the core variables, the researchers built a principal estimation sample of 1,524 respondents.

With this sample design, the results shouldn’t be interpreted as representative of every American household, since the study focused specifically on people already participating in financial markets outside retirement accounts.

The researchers then ran probit regressions to identify which household traits were associated with owning, or intending to own, crypto. One of the study’s main findings is the distinction between subjective and objective financial literacy.

Subjective financial literacy is about how knowledgeable respondents believe they are about investing, whereas objective financial literacy is about how they actually perform on a standardized quiz with ten financial-knowledge questions.

This distinction matters because those with high self-assessed financial knowledge were far more likely to own crypto, whereas objective financial knowledge showed no significant relationship.

In the baseline specification, households with high subjective financial literacy were roughly 9 percentage points more likely to own crypto than households with low subjective financial literacy. But once digital-investing capability was included, the estimated difference fell to about 6.3 percentage points.

So, believing one understands investing predicts crypto ownership better than actually demonstrating that one does. Digital fluency turned out to be an even more important part of the picture.

The researchers used the frequency of respondents’ investing through websites and mobile applications as proxies for digital-investing capability, explicitly acknowledging that these measures may capture broader familiarity with online investing rather than pure digital literacy.

Households that frequently invest via websites or mobile apps were substantially more likely to hold crypto, with effects considerably larger than those associated with subjective financial literacy.

In the baseline results, occasional website investing was linked with roughly a 5.6-6.3 percentage-point greater probability of crypto ownership, while frequent website investing was associated with an increase of about 11.3-12.3 percentage points, depending on the specification. Mobile-app measures showed a similar relationship.

This aligns with crypto being a structurally digital asset class. Everything from buying to trading and storing happens via platforms and apps, so people already comfortable with these interfaces face fewer practical or psychological barriers to entering crypto markets.

Risk attitudes were found to be as expected, providing another major explanation. Per the study, both general risk aversion and crypto-specific perceptions of risk had a negative relationship with the likelihood of owning crypto.

Households unwilling to take general financial risk were about 9.4 percentage points less likely to own crypto, while respondents who considered crypto highly risky were about 33.5 percentage points less likely to invest than those who viewed it as less risky. The authors caution, however, that the crypto-specific measure captures perceptions of the asset as well as underlying risk preferences, so these figures shouldn’t be taken as proof that risk tolerance causes crypto ownership, but rather as conditional associations.

Behavioral factors add yet another layer, with the researchers measuring overconfidence as the gap between what people think they know and what they can actually demonstrate.

The authors explain that overconfidence bias, a tendency in which investors overestimate their knowledge, skills, or the accuracy of their information, leads them to take greater risks, increasing the likelihood of not only owning crypto but also investing larger amounts than those with less confidence.

Although overconfidence is positively associated with crypto ownership, its estimated economic effect is very small. So, this finding should be understood as evidence that behavioral biases may contribute to participation rather than as evidence that overconfidence is the dominant reason Americans buy crypto.

A clearer behavioral signal came from myopia, referring to an investor’s preference for short-term gains over long-term value creation.

Those with short-term investment motives were about 4.0-5.1 percentage points more likely to own crypto across the study’s specifications. This is consistent with the idea that at least part of crypto demand is driven by expectations of rapid gains rather than building a long-term investment portfolio.

The study results also reinforce the relationship between impatience and cryptocurrency adoption and “underscore the importance of financial education to mitigate short-term, bias-driven investment behaviour in highly volatile markets.”

Moreover, the paper found higher crypto participation among people who opened investment accounts in 2020 or later and among those who traded more frequently during the pandemic, consistent with the broader acceleration of digitally enabled retail investing during COVID-19. The pandemic “coincided with greater interest in crypto assets as alternative investment vehicles amid heightened economic uncertainty and lockdown-related disruptions,” noted the study.

The researchers also shed light on where people get their investing information. The paper found that respondents who relied on social media for investment information were 10.5-21.1 percentage points more likely to own crypto, while those who relied heavily on professional financial advisers were 7.1-12.8 percentage points less likely to own crypto.

This is not to say that social media causes crypto investment or that financial advisers prevent it. However, the authors point to this divergence as evidence that advisers act as a cautious check on speculative, lottery-like investments, while social platforms amplify hype, fear of missing out (FOMO), and rapid-fire sentiment shifts.

Overall, the study presents crypto participation as a combination of confidence, higher subjective financial knowledge, digital familiarity, risk tolerance, stronger fraud aversion, and behavioral orientation, rather than as a straightforward consequence of conventional financial sophistication.

The authors noted that the findings, several of which are distinctive to the crypto setting, “highlight the need for targeted financial education initiatives that address behavioral biases and enhance digital financial competencies among crypto investors.”

It’s important to note, though, that the study used cross-sectional, unweighted 2021 survey data from existing non-retirement investors. It identifies associations rather than causation, meaning the study cannot determine whether these characteristics lead people into crypto or whether becoming a crypto investor subsequently changes their behavior.

The authors explicitly frame their results as conditional associations rather than causal mechanisms and identify the need for panel data, quasi-experimental designs, or credible instruments to draw stronger causal conclusions. The results also do not represent every American household.

Robinhood Markets

Operating at the intersection of mobile investing, retail behavior, social influence, and cryptocurrency participation, Robinhood provides direct exposure to all four mechanisms through a single consumer investing platform.

Robinhood offers a real-world example of the digital-investing environment identified by the study. Its significance lies in reducing the practical barriers between becoming interested in an asset and actually trading it.

“Robinhood exists to make everyone an owner,” CEO Vlad Tenev said during the company’s recent earnings call.

“It’s a powerful vision – not just for each individual customer – but I think also for society at large. I think that a society without ownership broadly distributed is very fragile. And we think broad ownership is essential to a free, stable, and prosperous society, because when more people have stake in the outcome – more skin in the game – they’re literally invested in the outcome.”

– Tenev

Founded in 2013, the platform didn’t launch crypto trading until 2018, and since then, it has integrated crypto into a broader retail-investing ecosystem.

Today, cryptocurrency trading is conducted through Robinhood Crypto, while stocks, ETFs, and options are handled through Robinhood Financial. Crypto assets are not FDIC-insured or SIPC-protected, though.

As for its cryptocurrency segment, Robinhood reported $40 billion in crypto trading volume in Q2 2026, down from $66 billion in Q1 2026. This included $18 billion through the Robinhood app, which decreased 35% YoY, and $22 billion through Bitstamp.

Lately, Robinhood has been venturing deeper into the crypto market by launching its AI-native Ethereum Layer 2 blockchain, Robinhood Chain, for financial services and real-world assets.

Then there’s Robinhood Earn, its first decentralized lending product, available directly in the app. This stablecoin lending product, powered by Robinhood Chain and USDG, allows customers to earn 7% APY and has captured $200 million in deposits in just a few weeks.

Robinhood has also been exploring tokenized stocks, with Tenev saying:

“We’re very excited about bringing ownership of real world assets to everyone in the world.”

Stock tokens are already available in over 120 countries through the platform, expanding exposure to assets like US stocks to anyone with an internet connection. Currently, Robinhood is “serving over 1 million accounts outside the US, and very much at the beginning there.”

When it comes to the company’s financials, total net revenue increased 32% YoY to $1.31 billion, and Average Revenue Per User (ARPU) increased 24% YoY to $187.

“We delivered record revenues and drove new highs across equity, option, and event contract volumes, as we continue to win market share. Our product velocity continues to deliver new products for customers and drive a more diversified business.”

– CFO Shiv Verma

Transaction-based revenues increased 44% YoY to $776 million, driven primarily by a 10x surge in event contracts revenue, a 95% jump in equities revenue, and a 29% increase in options revenue. This was partially offset by a 38% drop in crypto revenue.

For the period, Robinhood reported a 48% YoY increase in net income to $573 million, while diluted EPS increased 48% to $0.62. Adjusted EBITDA was $741 million, up 35% YoY.

Robinhood’s funded customers increased by 1.9 million during the quarter to reach 28.4 million, while investment accounts reached almost 30 million.

The company also shared insights into customer behavior, noting that active trader engagement reached new records in Q2 across equities, options, and prediction markets. Nearly 100,000 customers have opened Agentic Trading accounts, which were launched in May to allow users to trade equities, options, and crypto through AI-powered agents.

The company’s total platform assets surged to $369 billion, primarily driven by higher equity valuations and continued net deposits, which climbed to $21.7 billion. Cash and cash equivalents totaled $5.4 billion, including net proceeds from its recent convertible notes offering, compared with $4.2 billion at the end of Q2 2025.

Robinhood repurchased $414 million worth of shares during the period, including $290 million repurchased in connection with the June convertible notes offering.

“We opportunistically raised $2.2 billion of capital to give us even more flexibility to invest for future growth. We believe we have a massive opportunity ahead of us, and the capital gives us even more capacity to go after it,” said Verma.

The company launched its initial share repurchase program in Q3 2024 and has since repurchased $1.3 billion in shares under the program.

Click here for a list of top fintech stocks.

Conclusion

Crypto is widely known for its volatility and potential for massive financial gains, but the evidence suggests that high returns aren’t the only driver behind Americans’ decisions to invest in cryptocurrencies. Participation is driven by a combination of self-perceived financial competence, comfort with digital investing, willingness to accept risk, and heavy reliance on social media.

With crypto investment present among a significant minority of American adults and platforms like Robinhood embedding digital assets within increasingly broad retail-investment ecosystems, it becomes important for policymakers, educators, and the platforms themselves to not only close knowledge gaps but also address behavioral biases to shape how American households engage with crypto securely going forward.

Click here for a list of ten best investing apps.

References

1. Asaana, C. A. & Kakkar, V. Determinants of household crypto asset market participation: Evidence from the United States. International Review of Economics & Finance, 111, 105687 (2026). https://doi.org/10.1016/j.iref.2026.105687