- According to a JP Morgan report, most cryptocurrency holders made their first crypto purchase during price spikes.
- The study also found that crypto holdings were minor for most individuals, with median flows equal to less than one week’s worth of take-home pay.
- The findings indicate that crypto usage is broader and more profound for men and younger people with higher incomes.
According to a December 13th report dubbed “The Dynamics and Demographics of U.S. Household Crypto Asset Use,” around 13% of American citizens, or 43 million residents, have held crypto at some point.
The research findings indicate that the population transferred into crypto-related accounts quadrupled from a cumulative 3% recorded in 2020 to 13% as of June 2022.
The JP Morgan data comes from analyzing active account transfers from a sample of nearly five million customers. The findings showed that over 600,000 customers had conducted cash transfers to crypto accounts, linking the transfers with demographic indicators, which enabled the analysis of heterogeneity across racial groups, gender, and income.
The research findings also indicate that most crypto holders made their first cryptocurrency purchases during spikes in crypto purchases. During this period, the ratio of transfer to crypto accounts to money flowing back into traditional checking accounts was 2 to 1 from 2017 to mid-2022. Similarly, most crypto holders were holding onto their crypto during this period.
In early 2022, crypto prices started falling, and according to JP Morgan’s data, the cash transfers into the crypto exchanges merely outweighed the cash transfers out of them. However, the report says these results from both price declines in crypto and the broader trend of the savings rate decreasing in the United States since the onset of the COVID-19 pandemic.
“We view the rise and fall of crypto use since the onset of COVID as consistent with the collaborative relationship between retail flows and market prices seen in prior research. Additionally, the trend in crypto flows also tracks dynamics of household savings, which spiked to historic highs early in the pandemic but has begun to reverse.”
Demographic Data on Crypto Usage
The report also sheds some more light on the demographics of crypto usage. It showed that men are more involved in crypto than women, measured by the gross amount of transfers into and out of crypto accounts.
The study has also pointed out that crypto holdings for most individuals were relatively small, with median flows equal to less than one week’s worth of take-home pay. Additionally, almost 15% of crypto users had more than a month’s pay invested in crypto. JP Morgan noted:
“The distribution of crypto risk exposure is consistent with the view that higher income individuals were more willing and able to bear a crypto price risk.”
The findings show that most users who transferred money to crypto accounts did so when crypto-asset prices were significantly higher. Those with lower incomes likely made purchases at elevated prices relative to higher earners.
Due to the market turmoil, there have been crypto-related surprises and shocks in the crypto space, as many companies are collapsing and various executives are resigning. In early May, TerraUSD (UST) stablecoin lost its peg as the significant crypto exchange FTX filed for bankruptcy around November, leaving many customers in a lurch.
However, JP Morgan’s research indicates that crypto ownership has increased despite declining crypto prices over the last few years, giving hope to the crypto space’s faint-hearted users.