Crypto Ownership Doesn't Rise in Line With Recent Market Rebound: Research from the U.S. Federal Reserve

Research from the U.S. Federal Reserve reveals that cryptocurrency ownership isn't rising in line with the recent rebound in the crypto market.

As the cryptocurrency market experiences a surge in 2023, with Bitcoin prices rising by nearly 150% from the start of the year, one might expect a corresponding increase in cryptocurrency ownership among the U.S. population. However, recent research from the Federal Reserve reveals a surprising disconnect between the market's performance and the rate of crypto adoption.

According to a report published on September 6 by the Consumer Finance Institute (CFI) of the Federal Reserve Bank of Philadelphia, "The recent growth in the [crypto] market has not been matched by an increase in ownership among our survey respondents."

To track the performance of the cryptocurrency market, the CFI used daily prices for Bitcoin as a proxy. The data shows that the market hit its lowest point during the crypto winter at the end of 2022. From January to October 2023, prices rebounded gradually, but then surged rapidly through March 2024. Since that peak, they have stayed at or near their highest levels in the past five years.

Meanwhile, the CFI gathered data on cryptocurrency ownership through surveys conducted between January 2022 and July 2024. The findings show that crypto ownership declined during the 2022 bear market, with ownership rates dropping from 24.6% in January 2022 to 19.1% in October 2022.

Despite a market recovery over the next 18 months, ownership rates didn't increase proportionally. By October 2023, only 17.1% of respondents owned cryptocurrency, and this figure fell further to 15.4% by January 2024.

The report also noted that there was no significant rise in ownership around Bitcoin's peak in March or the April halving event, with rates at 16.1% in April and decreasing to 14.7% by July.

Bitcoin’s price compared to surveyed crypto ownership rates: Source: Federal Reserve Bank of PhiladelphiaThe current market situation does not seem favorable for most people. The Fear and Greed Index, which reflects market sentiment, is currently at 29 points. This indicates a bearish outlook, with many expecting further declines.

The sharp drop from the recent all-time high of $74,000 to today’s level of $54,800 has caused significant fear among market participants. This anxiety extends to altcoins, which have experienced even more drastic declines. Arbitrum has fallen four times from its peak, Notcoin has also decreased by a factor of four, and Mantle has dropped threefold.

Federal Reserve researchers observed that this year’s price increases seem to be linked to a higher likelihood of respondents considering future crypto purchases. Interest in buying crypto declined during the 2022 crypto winter, falling from 18.8% to 10.6% of respondents. However, as the market recovered, interest surged, with 21.8% of respondents indicating they are likely to buy cryptocurrency by April 2024.

The Fed’s surveys, which were conducted via two online polls with 5,000 nationally representative participants, show that while the crypto market has surged nearly 150% since the start of 2023, ownership rates have not kept pace. In May, the Fed reported that approximately 18 million Americans owned or used cryptocurrency in 2023, a figure lower than Coinbase’s estimate of 52 million American crypto owners in September 2023.

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