- Most individuals believe crypto is a good investment
- People are attracted to new technology
- Lack of trust in authorities turned people to crypto
The cryptocurrency market’s popularity rose exponentially in the last decade or so. The difference is stunning if one looks at the market capitalization of the entire industry today and compares it with, say, ten years ago.
So, knowing what drives people to invest in cryptocurrencies is interesting.
Guess no more.
A study by the Federal Reserve, called Federal Reserve’s 2022 Diary of Consumer Payment Choice, sheds light on this topic. So here are the main three reasons why investors hold crypto:
- Great potential investment
- People are interested in new technologies
- Some do not trust the US government or the US dollar
Most individuals own crypto as an investment
The overwhelming majority of individual investors own cryptocurrencies because they believe it is a good investment. More precisely, 67% of investors are crypto owners only from an investment perspective.
While this is impressive, it also tells much of the industry. It means that most investors are just speculating and hoping for higher prices than the ones they paid.
Coupled with the fact that only 0.3% of the respondents said they use it to buy goods and services in the United States, it tells much about the main reason people invest in cryptocurrencies.
Many own crypto because they are interested in new technologies
Another reason to own crypto is that investors want to have exposure to new technologies. 20.7% of investors are interested in new technologies, which is a good enough reason for them to buy and hold cryptocurrencies.
Lack of trust in the US government or the US dollar
1.6% of investors do not trust the US government or the US dollar. While not a big number, it reflects investors’ belief that the US government’s policies failed to support the local currency, and thus, investors turned to cryptocurrencies.
The rest of the respondents fell into other categories, which sum up to 8.6%.
