Translation: Blockchain in Vernacular
In 2023, the cryptocurrency market experienced a healthy recovery after a turbulent 2022 bear market, when several cryptocurrency companies went bankrupt. This rebound in cryptocurrency prices is consistent with the multi-year economic cycle around the halving of Bitcoin's supply. The fourth halving is expected to take place in April 2024, and the current price trend is relatively stable compared to the past.
Meanwhile, the blockchain industry’s winning streak against regulators in U.S. courts and expectations that the U.S. Securities and Exchange Commission (SEC) will approve a Bitcoin ETF in early 2024 have driven stunning returns for numerous cryptocurrencies since October.
Security.org analysts conducted their annual cryptocurrency study for the fourth consecutive year amid a resurgent cryptocurrency market. This year’s survey collected insights from more than 1,500 Americans, assessing consumer sentiment and key factors in cryptocurrency adoption.
Key findings
Cryptocurrency awareness and ownership rates have hit an all-time high: 40% of U.S. adults now hold cryptocurrency, up from 30% in 2023, meaning the number of holders could be as high as 93 million.
Among existing cryptocurrency holders, approximately 63% expect to increase their holdings in the next year, with the currencies they are most interested in being Bitcoin, Ethereum, Dogecoin, and Cardano.
Cryptocurrency ownership among women surged from 18% a year ago to 29% at the beginning of 2024.
21% of non-holders said the anticipated Bitcoin ETF made them more likely to invest in the cryptocurrency, meaning as many as 29 million Americans could soon enter the market.
46% of Americans believe that the approval of a Bitcoin ETF in 2024 will have a positive impact on the blockchain industry, and current cryptocurrency holders are even more optimistic about this.
1. Cryptocurrency holdings have risen sharply since 2023
Awareness and ownership of cryptocurrencies has continued to grow since we first conducted the research in 2021. In 2021, less than half of respondents knew about cryptocurrencies. Today, more than 80% say they have some knowledge of this financial technology.
Meanwhile, cryptocurrency ownership in the U.S. grew by 10 percentage points in 2023. Ownership has risen from 30% last year to 40% today. According to our estimates, as many as 93 million Americans may currently own one or more cryptocurrencies.
Men are still far more likely than women to hold cryptocurrencies. However, there has been a significant increase in women’s cryptocurrency holdings over the past year. This growth may stem from women’s widespread coverage of blockchain developments in the news, as well as their increasing investment in cryptocurrency and blockchain companies. For example, Unchained Crypto podcast host Laura Shin and ARK Invest founder and CEO Cathie Wood have been influential in the crypto space. Thanks to Wood's big bets on crypto stocks, her hedge fund ARK Innovation ETF became one of the most profitable ETFs in 2023. ARK has also applied for a Bitcoin ETF seat with the U.S. Securities and Exchange Commission (SEC).
On the political and regulatory front, pro-crypto Wyoming Senator Cynthia Lummis and pro-cryptocurrency SEC Commissioner Hester Pierce also played important roles.
At the same time, cryptocurrency holdings are similar across most age groups, with the exception of those over 60 years old who are significantly less likely to hold cryptocurrencies than younger groups.
2. How might a Bitcoin ETF change the cryptocurrency landscape in 2024?
Currently, 56% of existing holders are optimistic about market price growth in 2024. If their predictions are correct, more people may see net benefits by the time our next study is conducted in 2025. Among non-holders, 15% plan to purchase cryptocurrencies this year, a significant increase from 5% last year.
Existing holders and non-holders who are knowledgeable about cryptocurrencies believe that 2024 could be a good year for cryptocurrency prices. The U.S. Securities and Exchange Commission (SEC) is evaluating how to approve a spot Bitcoin exchange-traded fund (ETF). An ETF is a security that tracks the price of a single commodity, allowing people to invest in the stock market without having to buy the commodity directly.
After Grayscale sued the SEC for rejecting its Bitcoin ETF application, the District of Columbia Court of Appeals ruled in favor of the hedge fund in October 2023. The court essentially gave the SEC until January 10, 2024 to approve the Bitcoin ETF. More than a dozen other asset managers with pending approvals are also expecting their Bitcoin ETF applications to be approved in early 2024.
Interestingly, 39% of the general public had heard of the idea before participating in our study. However, cryptocurrency holders were significantly more aware of ETFs.
According to CoinGecko data, Bitcoin prices surged 28% in just two weeks after the court ruling, adding about $235 billion to the total market value of all cryptocurrencies. Galaxy Digital, a cryptocurrency hedge fund led by former Goldman Sachs partner Mike Novogratz, expects the Bitcoin ETF to bring in $79.5 billion in inflows to Bitcoin in its first three years.
46% of the general public believe that the approval of a Bitcoin ETF in 2024 will have a positive impact on the blockchain industry, while current cryptocurrency holders are more optimistic about this.
Current cryptocurrency holders are most likely to increase their investments in blockchain in anticipation of SEC approval of an ETF. Even 21% of non-holders said this development would make them more interested in buying cryptocurrencies.
63% of people who have never owned cryptocurrencies believe that cryptocurrencies should be subject to more government regulation. A regulated Bitcoin ETF may make them more confident in investing. In contrast, only 36% of holders believe that cryptocurrencies need more government regulation.
3. The most popular currency in 2024
Most of the study respondents first purchased cryptocurrencies in 2020 and 2021, but have since seen fewer people joining the market due to poor market performance in 2022. Blockchain adoption has accelerated in 2020 and 2021 as Bitcoin's third supply halving on May 11, 2020, boosted price performance on crypto exchanges.
The supply halving is programmed into Bitcoin's software and occurs every four years. As the name implies, the supply of new Bitcoins issued on average every ten minutes will be cut in half. The 2020 halving will reduce the new Bitcoin supply in each new transaction block from 12.5 BTC to 6.25 BTC. The 2024 halving will reduce the new supply to 3.125 BTC.
Another key factor in 2020 and 2021 is that investors have flocked to Bitcoin and other deflationary blockchain currencies in order to hedge against global inflation and geopolitical risks during the pandemic.
As the new supply of Bitcoin decreased by 50%, the Federal Reserve increased the supply of US dollars by 20% in the first half of 2020 to respond to the economic recession caused by the epidemic. This supply and demand relationship caused Bitcoin to appreciate rapidly relative to the US dollar.
Since Bitcoin is the first cryptocurrency launched in 2009 and has more than 50% of the market by market capitalization, it remains the center of gravity for the exchange rates of other cryptocurrencies such as Ethereum, Ripple, Dogecoin and Shiba Inucoin.
4. What will be the most popular cryptocurrency in 2024?
Percentage of current holders holding various currencies, by year.
In our 2024 research, we found that Bitcoin holdings remain the most popular choice, with about three-quarters of cryptocurrency holders holding Bitcoin.
Although Ethereum (ETH) remains the second most popular cryptocurrency, its ownership rate has dropped significantly, from 65% at the end of 2021 to 54% at the end of 2023. Due to widespread attention on the Ethereum merger completed on September 15, 2022, which changed the security of Ethereum versus ETH, many cryptocurrency adopters are viewing 2022 as a good year to hold Ethereum.
Since then, however, competition from other smart contract cryptocurrencies like Solana (SOL) and Binance Coin (BNB), coupled with stubbornly high transaction fees, has caused ETH’s holding rate to decline.
Meanwhile, we found that Ripple (XRP) holdings among crypto adopters increased from 7% to 9% during 2023, following Ripple Labs’ victory in court against the SEC. Despite the significant victory, the lawsuit is still pending and will go to trial in April 2024.
Among existing cryptocurrency holders, about 63% expect to acquire more cryptocurrencies in the next year. Here are the major currencies they plan to invest in:
Bitcoin: This year’s supply halving coincides with an expected ETF product creating access to the market and sparking interest among mainstream regulated investors.
Ethereum: Crypto consumers are looking forward to another Ethereum upgrade to boost speed and lower fees while awaiting the launch of a spot Ethereum ETF by BlackRock, Inc.
Dogecoin: DOGE does not have a halving like BTC, but it also uses industry-leading 256-bit encryption technology for security protection.
Cardano: ADA has been a competitor to ETH since it added smart contracts in September 2021. In 2024, the project plans to formalize its governance philosophy into smart contract code.
5. Crypto Portfolio Performance and Public Perception
Among holders, the most popular reason for cryptocurrency adoption is diversification. With Bitcoin’s correlation with stocks at its most negative since pre-pandemic, cryptocurrencies overall have been a great success as a portfolio diversification tool in 2023.
More than a third of holders hold cryptocurrencies out of a strong interest in the technology. They may understand the economic and financial aspects of cryptocurrencies, but they also value the technology — mathematically advanced software developed in part by security agencies such as the National Security Agency (NSA).
Meanwhile, 22% invested because someone they knew recommended it. This is how billionaire hedge fund manager Steve Cohen adopted cryptocurrencies. He was skeptical at first, but after some conversations with his son, Cohen became a crypto enthusiast.
The main motivations for cryptocurrency adopters remain consistent with our findings from a year ago.
As shown above, more than half of cryptocurrency holders purchased cryptocurrencies to increase the profitability of their assets. Currently, about 45% say they have received a return on their investment. However, 30% experienced a net loss when purchasing cryptocurrencies.
The earlier you enter the market, the greater the likelihood of a return. This suggests that cryptocurrencies are unlikely to make you rich quickly. However, accumulating Bitcoin on a weekly basis from October 2022 to October 2023 would have yielded a modest annual return of 13%. Over the same period, accumulating the S&P 500 ETF using the same strategy would have yielded an annual return of 2.36%.
6. Cryptocurrency Concerns in 2024
While the concept of a Bitcoin ETF eases the concerns of some hesitant investors, many cryptocurrency holders and non-holders remain concerned. Although people may soon be able to trade Bitcoin like any other stock, nearly two-thirds of people who have a money manager or financial advisor are still uneasy about investing in cryptocurrencies.
A December study by investment bank and asset manager Needham & Company found that this could be because clients are more inclined to buy cryptocurrencies on cryptocurrency exchanges. This does align with the DIY financial philosophy of owning and using cryptocurrencies. The study found that almost all advisors expect client interest to increase if the price of Bitcoin continues to rise.
Although more and more people are open to cryptocurrencies in 2024, 44% of non-holders said they would never buy cryptocurrencies. The main reasons are unstable value and lack of government protection.
Some non-holders are concerned about attacks by cyber criminals (3%), but current holders are more concerned about this (11%).
Concerns about the unstable value of cryptocurrencies are a major concern for both non-holders and existing holders. This is understandable, as Bitcoin, the most popular and highest capitalized cryptocurrency, has seen its price drop by more than 50% six times in history.
More than a quarter of non-holders expressed concerns about the lack of protection from government or bank regulation. Owning blockchain assets presents several unique risks, such as cyber theft, lost passwords, and costly transaction errors that cannot be reversed.
While few people are concerned about losing access to their funds, 14% of holders have experienced problems accessing their cryptocurrencies. Keeping the private keys to your cryptocurrencies in your own hands, rather than in a custodian such as an exchange or fund, makes losing your private keys or forgetting your access passwords a potential risk.
To summarize, here are the main cryptocurrency concerns to watch out for in 2024:
1) Investing Uncomfort: About two-thirds of people who use money managers are uncomfortable with investing in cryptocurrencies.
2) Preference for cryptocurrency exchanges: Many people prefer to buy cryptocurrencies on cryptocurrency exchanges.
3) Interest is correlated with Bitcoin price: Advisors predict that if Bitcoin price continues to rise, interest in the cryptocurrency will increase.
4) Unwilling: 44% of non-holders said they would never buy cryptocurrency.
5) Value instability: People who hold or do not hold cryptocurrencies are concerned about price changes.
6) Lack of government protection: More than a quarter of non-holders are concerned about the lack of government protection.
7) Cybercrime: Cybercrime has raised concerns about cryptocurrency. In fact, 11% of current holders and 3% of non-holders are concerned about it.
8) Volatility: It’s no secret that Bitcoin’s price has fallen. On six different occasions, its price actually dropped by more than 50%.
9) Accessibility Issues: 14% of cryptocurrency holders have experienced trouble accessing their cryptocurrency.
7. Conclusion
Our Cryptocurrency Adoption and Sentiment Survey from a year ago revealed a crisis of confidence in the industry and a cautious outlook for the cryptocurrency market. These results coincided with the market bottom prices after the 2022 crypto winter.
In the years since, cryptocurrency prices have rebounded significantly, with the digital asset recording significant price gains on crypto exchanges from 2023 to 2024. Market outlook, consumer sentiment and enthusiasm for adoption have also risen sharply in the last year as prices of popular cryptocurrencies have recovered.
The road ahead is still fraught with all the risks of innovative technology and disruptive new industries. However, cryptocurrencies also promise the potential for the kind of returns that investors have come to expect from successful high-tech businesses since the 1990s.
