Cryptocurrency trading, especially Bitcoin and Ethereum among others, saw a sharp rise at the beginning of 2020. Trading has been on a steady incline since February and doesn’t seem to be slowing down. Especially since it has been sustained through the height of the coronavirus pandemic. Is the pandemic the reason for the sudden Bitcoin binge?
According to the website Coin Metrics, “If historical growth rates can be maintained, Bitcoin’s current daily volume would need fewer than four years of growth to exceed the daily volume of all US equities and fewer than five years to exceed the daily volume of all US bonds.” So, who, exactly, is fueling the cryptocurrency buying binge during a pandemic, and is it sustainable?
Who Are The Coronavirus Pandemic Bitcoin Buyers?
Cornerstone Advisors conducted a recent study on cryptocurrency buying trends. They discovered that 15% of American adults have some form of cryptocurrency in their asset portfolio. Just over half of them invested for the very first time from January to June of 2020. This averaged out to about $4,000 per person with a total cryptocurrency value of $67.5 billion. Bitcoin and Ethereum valued at about $7,000 per person or $11 billion prior to 2020. Based on data from September 2019 to current, the United States cracked the top 10 countries that adopted cryptocurrency.
What Is The Demographic Of The Buyers?
The demographic behind the cryptocurrency buyers probably won’t surprise anyone. Some of the buyers have been well-educated men making an average income of $130,000 with a master’s degree or higher. Millennials and Gen Xers have accounted for 57% and 30% of the investors, respectively. And 47% of the buyers are customers of Bank of America.
First Time Investors Claim Financial Health Is “Much Better”
While there is no proof that cryptocurrencies are the cause, 44% of Americans that invested in some cryptocurrency, felt their financial health is “much better” than it was at the beginning of the pandemic. These new investors differ from seasoned cryptocurrency holders in that they switched their banking institution in the last six months, going with a bank that was more receptive to cryptocurrency.
Digital Banking Apps Have Seen A Positive Effect From Cryptocurrency Investors
Digital banking apps such as Square, Cash App, PayPal, and Venmo have seen a positive effect from people using cryptocurrency. Square and Cash App have had increased revenue from Bitcoin investments, and PayPal and Venmo are getting set to offer cryptocurrency purchases through their applications.
Most banks do not allow their customers to purchase cryptocurrencies using their bank cards. However, that could change as more banks are starting to talk about offering more cryptocurrency services. According to an announcement from the Office of the Comptroller of the Currency (OCC), “…national banks have the authority to provide fiat bank accounts and cryptocurrency custodial services to cryptocurrency businesses. This clarification may open the doors for larger financial institutions to provide bank accounts to cryptocurrency companies, as well as provide custodial services for customers’ private keys.” So far, according to Moon Banking that scores banks on “crypto friendliness,” USAA and Ally Bank are leading the way for American cryptocurrency investors.