While much of the investing world remains skeptical about cryptocurrency, many millennials have embraced this new wave of digital assets, according to a recent Bankrate survey. Nearly half of millennials (49 percent) are at least somewhat comfortable with investing in crypto assets such as Bitcoin, compared to 37 percent of Generation X and only 22 percent of baby boomers.

In fact, millennials (ages 25-40) express the most comfort of all age groups with cryptocurrency. About 15 percent say they are “very comfortable” investing in digital currencies, compared to just 7 percent of Generation X (ages 41-56) and 4 percent of baby boomers (ages 57-75).

Some millennials aren’t just comfortable with cryptocurrency, but actually think it’s the top place to invest. About 12 percent of millennials think Bitcoin or other cryptocurrency is the best way to invest money that they won’t need for 10 years or more, according to the survey.

In comparison, just 9 percent of Generation X and 5 percent of baby boomers say that cryptocurrency is the best investment over the next decade or more.

The survey results come during a period of escalating interest in Bitcoin and other cryptocurrencies. In mid-October, the first Bitcoin-linked ETF began trading to great fanfare, allowing investors to wager on the price of the cryptocurrency through a stock exchange.

Should you invest in cryptocurrency?

While many Americans may be comfortable investing in cryptocurrencies, financial experts caution that they come with some key drawbacks, including their purely speculative nature. Their design makes cryptocurrencies tremendously risky and unsuitable for most investors.

Bitcoin has been on a roller-coaster ride in 2021. It started the year around $29,000 and soared to more than $63,000 by mid-April. But news about China outlawing cryptocurrency helped drive the crypto coin lower. It eventually bottomed below $30,000 in late July, but since then it has more than doubled in price and hit a new yearly high, at nearly $67,000, in October.

After such massive gains on Bitcoin, Ethereum and many others, some new traders may be jumping into the market because they’re afraid of missing out on the gains. But they may not completely understand that these cryptocurrencies are being driven higher solely by speculation.

Popular cryptocurrencies are not backed by anything, unlike traditional investments such as stocks, which can be supported by the assets and cash flow of a real company.

“There is no underlying, fundamental value like a piece of real estate or security such as a stock or bond,” says Greg McBride, Bankrate’s chief financial analyst. “The price represents what someone else is willing to pay for it, but that can change a great deal in a short period of time as we’ve seen.”

The volatility of Bitcoin and other cryptocurrencies is intense, as the Bitcoin price chart shows. This kind of fluctuation is especially dangerous for inexperienced traders who may not understand how to handle it or how to process their own emotions. But the volatility is also an attraction for the kind of trader who’s looking to make a quick score on Bitcoin’s rebound.

If you’re considering adding cryptocurrencies to your portfolios, it’s important to remember that they’re high risk and size them accordingly, says Tony Molina, CPA and product evangelist at the robo-advisor Wealthfront. “This means that you should only put a small portion of your entire portfolio into cryptocurrencies to limit your risk.”

Given the speculative nature of cryptocurrency, you should be prepared to lose it all, says McBride. “Even large institutional and very wealthy individual investors allocating to crypto are putting 1 percent or less of their assets into it,” he says.

Such a small allocation to cryptocurrency ensures that even if it does go bust, your investment won’t sink your whole portfolio.

But beyond the risks of the cryptocurrency itself, you often have much higher priorities for money than gambling in a high-risk market, says McBride. He points to having “an adequate emergency fund, contributing to tax-advantaged retirement accounts such as a 401(k) and Roth IRA, paying off high-cost credit card debt” among other goals that should take priority.

And millennials favoring cryptocurrency should also make sure student loans are paid off before wading into the cryptocurrency arena. Paying off your debt and eliminating that interest expense is the surest return you’ll ever receive, and it gives you more financial freedom, too.

Other concerns with cryptocurrencies

Trading in cryptocurrencies also presents other issues, and those wading into the market should consider how they can be affected by the taxes they may rack up — even if they don’t receive official tax forms — and the range of scams they may run into as part of cryptocurrency trading.


You may think that cryptocurrency is not subject to taxes, but you’d be wrong. Like other assets, if you make a profit on your trades, you’ll owe capital gains taxes. The IRS is looking much closer these days at those who may be trying to evade taxes through cryptocurrency, and it’s a big area of enforcement now. In fact, if you’ve traded or used cryptocurrency in a tax year, you’ll have to divulge that information on your annual tax return or risk lying to the authorities.

But it’s not just traders who can generate tax liabilities if they’re dabbling in crypto. Even if you’ve simply used cryptocurrency to buy something, you may have generated a tax liability if the purchased goods and services were valued at more than the price you paid for the crypto.

And you’re still on the hook even if you didn’t receive a tax statement from your crypto broker. So it’s up to individuals to make sure they’re in compliance with the tax laws or risk the penalty.


While cryptocurrency has been linked with high-profile ransomware attacks, individuals can be subject to lower-profile scams. In fact, a surprisingly high number of people already have been.

Nearly 33 percent of crypto owners have been scammed, according to a survey of 1,000 crypto owners by CryptoVantage, a review site for crypto products. The average loss was $538.

The most popular scams involved emails, impostor websites and fake mobile apps. The most costly for crypto traders was impostor websites, where traders lost an average of $932.


This study was conducted for Bankrate via phone interview by SSRS. Interviews were conducted from May 25-30, 2021, among a sample of 1,008 adults. Data are weighted and are intended to be representative of all U.S. adults, and therefore are subject to statistical errors typically associated with sample-based information.