Crypto Winter Deepens: Only 8% of Americans Hold Favorable View Amid FTX Fallout – CNBC Survey

Is the crypto dream fading for everyday Americans? Recent headlines paint a grim picture, and a new CNBC survey seems to confirm the shift in sentiment. Just how much has the crypto landscape changed in recent months? Let’s dive into the details of the latest CNBC All-America Economic Survey and what it reveals about the current state of crypto perception.

Crypto Confidence Crash: What the CNBC Survey Tells Us

Conducted in late November, shortly after the shocking collapse of crypto exchange FTX, the CNBC survey highlights a dramatic plunge in public opinion towards cryptocurrency. Here are the key takeaways:

• Sharp Decline in Favorable Views: Only 8% of Americans now hold a positive view of cryptocurrency. This is a significant drop from 19% recorded in March of the same year.
• Rise of Crypto Critics: The number of Americans with a negative view of crypto has nearly doubled, surging from 25% in March to a staggering 43% by November.
• Survey Snapshot: The CNBC All-America Economic Survey, conducted between November 26th and 30th, sampled 800 individuals across the US. While insightful, it’s important to remember the +/- 3.5% margin of error due to its sample size.

This data paints a clear picture: public trust in crypto is eroding. CNBC aptly describes this as a “dramatic fall” for an asset class that was once heavily promoted and enjoyed mainstream attention, even with Super Bowl ads and celebrity endorsements.

From Boom to Bust: Why the Sentiment Shift?

So, what’s behind this drastic change in public perception? While the survey doesn’t pinpoint specific causes, recent turmoil in the crypto world undoubtedly plays a major role. Let’s recap some of the key events that likely contributed to this shift:

• Terra (UST) Implosion (May 2022): The collapse of Do Kwon’s stablecoin Terra USD (UST) wiped out a staggering $44 billion from the market. This event shook investor confidence and exposed vulnerabilities within the crypto ecosystem.
• Celsius Network Bankruptcy (July 2022): Crypto lender Celsius, along with other firms, declared bankruptcy and froze user funds. This further fueled anxieties about the security and stability of crypto platforms.
• The FTX Earthquake (November 2022): The bankruptcy of FTX, once the third-largest crypto exchange, sent shockwaves through the industry. Billions were lost, and customer funds were locked, severely damaging the reputation of the crypto market.

These high-profile failures have understandably scared away many potential and existing crypto investors, particularly retail investors.

Retail Investors Losing Faith: The Numbers Don’t Lie

The CNBC survey reveals that even among those who previously invested in crypto, faith is waning:

• Negative Views Among Crypto Investors: A significant 42% of crypto investors now hold a “somewhat or very negative view” of the asset class. This is almost as high as the negative sentiment among the general public (43%).
• Deeper Negativity Among Non-Investors: While negative sentiment is prevalent across the board, it’s notably stronger among those who haven’t invested in crypto. 47% of non-crypto investors hold a “very negative” view, compared to 17% of crypto investors.

This suggests that while even current crypto investors are becoming disillusioned, the negative perception is even more entrenched among those outside the crypto sphere.

The Voice of Experience: Brian Brook on Retail Sentiment

Brian Brook, CEO of crypto exchange Bitfury, offered valuable insights at the CNBC Financial Advisor Summit. He emphasized the crucial role of retail investors in the crypto market:

“That popularity attracted many ordinary Americans to crypto, and the survey shows 24% of the public invested in, traded, or used cryptocurrency in the past, up from 16% in March.”

Brook highlighted that crypto is predominantly a “90% retail market,” meaning the sentiment of everyday investors significantly impacts market dynamics.

“And so when you read FTX stories on the front page of the Wall Street Journal, literally every day for the last 30 days… what it does is for relative new entrants, they get scared. “

He explained that constant negative news coverage, like the FTX saga, understandably frightens new investors, leading to reduced liquidity and investment willingness.

Institutional Investors: A Different Perspective?

However, the crypto narrative isn’t entirely bleak. Interestingly, institutional investors seem to be taking a different stance. Let’s look at some contrasting data:

• Coinbase Survey (September-October 2022): A Coinbase-sponsored survey, conducted prior to the FTX collapse, revealed that 62% of institutional investors increased their crypto allocations over the past year.
• Bitstamp Data (November 2022): Even amidst the FTX crisis in November, Bitstamp reported a 57% surge in institutional registrations on their digital asset trading platform.

This suggests a divergence in sentiment between retail and institutional investors. While everyday investors are becoming more wary, institutions might be seeing the market downturn as an opportunity to increase their crypto holdings at lower prices, potentially with a longer-term investment horizon.

Key Takeaways: Navigating the Crypto Winter

The CNBC survey provides a sobering snapshot of current crypto sentiment. Here’s what we can conclude:

• Public perception of crypto has taken a significant hit, largely due to recent market events and exchange failures.
• Retail investor confidence is shaken, and negative views are on the rise, even among some crypto investors.
• Institutional investors seem to be maintaining or even increasing their crypto engagement, suggesting a possible long-term bullish outlook from established financial players.
• The crypto market is currently heavily influenced by retail sentiment, making it vulnerable to fear and negative news cycles.

What does this mean for the future of crypto? While the short-term outlook for retail crypto adoption appears challenging, the continued interest from institutional investors offers a glimmer of hope. The crypto market is known for its volatility and cyclical nature. Whether this current downturn is a temporary “crypto winter” or a sign of a more profound shift remains to be seen. However, one thing is clear: rebuilding public trust will be crucial for the long-term success of the cryptocurrency industry.