According to Bloomberg, a recent study has shed light on the impact of cryptocurrency wealth on the US economy and consumer spending patterns. The research suggests that the effect of cryptocurrency wealth on the $28 trillion American economy has been relatively modest so far. However, if the asset class continues to grow, it could potentially alter consumer behavior.
The study found that over the past decade, the newfound wealth from cryptocurrencies has increased household consumption by approximately $30 billion. For every dollar of unrealized gains, about nine cents were spent. This figure is nearly double the marginal propensity to consume from stock-market returns, but only about one-third of that from income shocks such as lottery winnings.
Interestingly, the study revealed that the wealth was not just spent on luxury items, as often portrayed on social media. A significant portion was invested in real estate, particularly in areas where cryptocurrencies are popular. This has led to a boost in local housing markets in states like California, Nevada, and Utah.
The researchers also analyzed the impact of cryptocurrency wealth on home prices. They found that in 2017, when Bitcoin's price jumped nearly 1,400%, home prices in counties with high crypto wealth grew 43 basis points faster. This pushed the median house price up by about $2,000 in 12 months. Over the decade through 2023, every dollar gained in households’ crypto wealth pushed the median home price up by 15 cents over the following three months.
The study also found that Americans increased their total spending in the year after a large withdrawal from their crypto brokerages by around $5,754 relative to the prior year. Mortgage spending remained constant in the six months leading up to large withdrawals, but it rose significantly after the event. 'For every household that withdrew $5,000 from their crypto exchange account, one in 20 bought a house for the first time,' said the researchers.
