$BTC
On Friday, the Consumer Finance Institute (CFI) of the Federal Reserve Bank of Philadelphia released a new report that looks at an intriguing question: Do changes in cryptocurrency prices actually affect how many people own crypto? The report, written by Senior Advisor and Research Fellow Tom Akana, sheds light on the relationship between the ups and downs of the crypto market and consumer behavior.
Akana explained how the data was gathered, saying: "Since January 2022, weâve been tracking cryptocurrency ownership through six separate surveys. Every survey asked about current crypto ownership, and three also asked people if they planned to buy crypto in the future." The research is part of a broader effort by the CFI to understand how peopleâs finances, income, and expectations impact decisions like owning cryptocurrency.
Bitcoinâs Price Climbs, But Fewer Are Holding It.
Despite Bitcoinâs significant price increase since October 2023, the report found something surprising: ownership rates didnât follow suit. While Bitcoin's value has skyrocketed, the number of people actually holding onto Bitcoin hasnât gone upâand, in some cases, itâs even dipped a little.
The report includes a graph that tracks Bitcoinâs daily closing prices from July 2021 to July 2024. It compares these price changes with data from the surveys, revealing that Bitcoin's rising value hasn't necessarily translated into more people jumping into the market.
How Market Conditions Impact Ownership
The data collected from January 2022 and October 2022 offers a unique perspective. These periods coincided with the âcrypto winter,â when Bitcoin, along with most cryptocurrencies, faced steep price drops. Despite these tough market conditions, consumer ownership didnât drop off a cliff. In fact, many people seemed to hold steady through the downturn, indicating that some crypto owners are in it for the long haul and not easily shaken by temporary price drops.
Akana pointed out that even though Bitcoin's price has soared since the LIFE Survey started tracking crypto ownership in October 2023, ownership levels have "actually declined slightly across four survey periods, even though the marketâs performance seems to be sparking greater interest in future crypto purchases." In other words, more people are thinking about buying Bitcoin, but fewer are actually taking the plunge.
Future Interest is Growing
While current ownership rates arenât booming, the report highlights a growing interest in buying cryptocurrency in the future. Akana noted that the crypto marketâs positive performance seems to be fueling this interest. Itâs possible that many people are waiting for just the right moment to buy, or they might be waiting for more certaintyâeither from the market itself or regulatory authorities.
What Does This All Mean for Crypto Ownership?
The findings from the CFIâs report paint a complex picture of how cryptocurrency price changes influence consumer behavior. Price surges donât always lead to more immediate ownership, but they do seem to spark curiosity and future buying plans. This suggests that consumers are becoming more cautious and strategic when it comes to investing in crypto, perhaps waiting for the right time to make their move.
As the cryptocurrency market continues to evolve, it will be interesting to see how consumer behavior shifts in response to market fluctuations, new regulations, and broader economic trends. For now, it seems that while prices may go up, consumers are approaching crypto ownership with a wait-and-see mindset.