The cryptocurrency ecosystem is inundated with experts and ideologues praising cryptocurrencies as moral solutions to escape corrupt financial systems or as prudent strategies to defend against significant catastrophes.
According to recent research by the Bank of International Settlements (BIS), these reasons are like the buffet at a casino: a nice bonus if it’s there and a handy way to explain the whole thing, but not what’s drawing customers in. The authors of the working paper compiled a substantial dataset of retail investors’ daily use of crypto exchange applications across 95 countries from 2015 to 2022.
The analysis shows that an increase in Bitcoin’s price is the single most significant factor influencing consumers to download cryptocurrency applications and purchase them. First, they claim, “we show that an increase in the price of Bitcoin is significantly correlated with a rise in new users, i.e., entry of new investors,” adding that the correlation between newsworthy price increases is strong even after they took other factors into account, such as “overall financial market conditions, uncertainty, or country.”
Evolution of Adoption of Crypto Exchange Apps
Researchers discovered that “the price of Bitcoin remains the most meaningful element when we control for global uncertainty or volatility,” refuting assertions that it is a haven. Even after considering various degrees of economic development, institutional quality, and trust, a simple price increase “still has a major influence on the number of new consumers.”
Researchers stated that “A rise in the price of Bitcoin is associated with a significant increase in new users, i.e., entry of new investors. The correlation between newsworthy price increases is still strong after adjusting for factors like “overall financial market conditions, uncertainty, or country characteristics.”
Statistics of Crypto Owners (w.r.t Age and Gender)
The study also amply demonstrates how accurate the “crypto-bro” stereotype is. They state that 40% of crypto users were men under 35. An additional 25% of men were in the age group of 35 to 54, on average. Most users on websites like Binance, Coinbase, and FTX are male and young. Young males invest in bitcoin and use platforms in large numbers. Their survey shows less than 35% of users globally are women, and most women who use bitcoin apps are under 35.
Crypto: A Speculative Investment
After carefully comparing the purchases with the timing of downloads, the researchers explained that “the feedback trading considerations were the main reason behind consistent speculative investment and users are attracted towards crypto just because of the rising prices of bitcoin and better store of a value.”
Young guys start using cryptocurrency when they are performing well. The study’s results also “confirm the idea that, overall, investors see cryptocurrencies as a speculative investment (a “gamble”) rather than a source of payment for legitimate economic activities.” They further inquire, “Are customers adequately prepared for the potential ramifications of a price correction if backward-looking price fluctuations only influence consumers?” The answer to this question is already known in a world with Luna, Venture, and FTX.
Researchers concluded that “We estimate that 73–81 percent of global investors have probably lost money on their cryptocurrency investments. Also, the larger investors (“humpbacks”) may give grounds for further investigation of claims that crypto will “democratize” the financial system.”