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Recent findings from the U.S. Federal Reserve offer intriguing insights into the state of cryptocurrency ownership amid a fluctuating market. Despite a notable rebound in the cryptocurrency market, the ownership levels among U.S. consumers have not followed suit, raising questions about the market’s long-term attractiveness to retail investors.
Insights from the Federal Reserve Report
The report, published by the Federal Reserve Bank of Philadelphia’s Consumer Finance Institute (CFI), analyzed data from surveys conducted between January 2022 and July 2024, using Bitcoin prices as a reference point to understand trends in ownership. Surprisingly, the findings indicate that even as the crypto marketplace experiences growth, the number of people investing in or owning cryptocurrencies has remained relatively stagnant.
Impact of the 2022 Crypto Winter
The CFI’s analysis highlighted a significant decline in cryptocurrency ownership during the 2022 bear market, often referred to as the “crypto winter.” In January 2022, approximately 24.6% of survey participants indicated that they owned cryptocurrencies. However, by October of the same year, this figure plummeted to 19.1%. Despite a recovery in the market over the next 18 months, ownership rates continued to drop, reaching 17.1% by October 2023, and further declining to 15.4% by January 2024. Notably, despite a surge in Bitcoin’s price in March 2024 and its subsequent halving event in April, ownership rates kept falling, hitting 14.7% by July 2024.
Shifts in Investor Sentiment
While ownership numbers remain low, the report reveals an interesting shift in potential investor sentiment. Interest in future cryptocurrency investments significantly declined during the 2022 bear market but rebounded as the market recovered. By April 2024, 21.8% of respondents expressed a likelihood of purchasing cryptocurrencies, a noteworthy increase from a low of just 10.6% during the downturn. This suggests that while current ownership is down, more individuals are considering entering the market in the future.
Caution Among U.S. Adults
A separate annual household survey conducted by the Federal Reserve, known as the Survey of Household Economics and Decisionmaking (SHED), reflects a broader trend among U.S. adults regarding cryptocurrency usage. The survey indicates a significant decline in cryptocurrency engagement, with only about 18 million U.S. adults reporting any usage in 2023—down from 10% in 2022 and 12% in 2021. This translates to approximately 7% of surveyed adults acknowledging cryptocurrency usage, a stark contrast to Coinbase’s assertion that around 52 million Americans own cryptocurrencies.
Institutional Interest Grows
In contrast to declining retail ownership, institutional investor interest in cryptocurrencies appears to be on the rise. According to a recent KPMG survey, nearly 40% of institutional investors reported having some exposure to crypto assets in 2023, an increase from 31% in 2021. Furthermore, one-third of respondents indicated they allocated at least 10% of their portfolios to crypto assets, a notable improvement compared to just 20% two years prior. The growing institutional interest seems to be driven largely by improvements in the market and custody infrastructure, with 67% of survey participants identifying these advancements as critical factors, a significant rise from 14% in 2021.
These findings collectively paint a nuanced picture of the current cryptocurrency landscape, revealing both the challenges faced by retail investors and the growing allure of digital assets among institutional players.
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