Despite Bitcoin's price skyrocketing since the start of 2023, a recent study from the Philadelphia Federal Reserve (FED) found that cryptocurrency adoption is not keeping pace with the surge, suggesting that other factors are influencing investor interest.
The increase in the price of cryptocurrencies would ultimately not be a driver of its adoption
Generally speaking, there are several forms of Bitcoin and cryptocurrency adoption. The first is driven by the search for profit, which is how the majority of BTC holders get their start. After a while, these investors leave the market, either making profits or losses, while others stay, attracted by the “technology”.
Beyond that, Some become more deeply involved when they grasp the economic, even philosophical, dimension that Bitcoin brings to the world..
Overall, one might think that the rising price of BTC and other cryptocurrencies is attracting new users looking to profit from this market.
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However, A recent study published by the Federal Reserve (FED) of Philadelphia concludes, on the contrary, that the rise in the price of cryptocurrencies does not lead to an increase in the number of users..
Bitcoin Price and Cryptocurrency Ownership Rates
The study indicates that the number of Bitcoin users among US citizens is decreasing over timedespite a strong price increase and a new historical record reached by BTC in March 2024.
According to the Philadelphia Fed, prices and adoption rates are not strictly correlated. It is therefore possible that increased adoption depends more on market awareness.attracting inexperienced investors who, at the end of each cycle, allow larger investors to withdraw by selling their purchases made several months earlier.
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Other studies contradict the FED
According to a report published by the Crypto.com exchange platform in January 2024, more than half a billion people hold cryptocurrencies, marking a 34% increase from the previous year, from 432 million to 580 million users, despite historically low cryptocurrency prices.
ADAN reported a similar finding, revealing that 12% of French people held cryptocurrencies at the start of 2024, compared to 8% at the start of 2022.
These studies seem to contradict the trend described by the FED. But, beyond the fact that these studies concern different populations, They could also be based on different methodologies and definitions of the term “user”.
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These studies do not really provide precise details, but The difference could be explained by the fact that the Crypto.com and ADAN study includes small-dollar holders among users.unlike that of the FED.
Indeed, given the price fluctuations since 2021, it is reasonable to assume that inexperienced investors during this period sold the majority of their cryptocurrencies, while retaining small residual amounts in their portfolios.
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Source: FED
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First lured by the lure of gain, I am now trapped deep into the rabbit hole. With no way out, I have no choice but to share my knowledge and transmit the passion I have for Bitcoin. I am also the creator of Adopt a Block, an educational site dedicated to Bitcoin.
Marius Farashi Tasooji
295 articles
