Bitcoin investors are more likely attracted to the cryptocurrency’s increasing prices, rather than their dislike of banks or its perceived use as a store of value, according to a new report from the Bank for International Settlements.
According to the report, Bitcoin prices are closely linked to crypto trading and retail adoption. While crypto trading has seen a recent uptick, retail adoption has been slow to take off. The central bank body believes that this relationship is complex and requires further investigation.
The study looked at the drivers of crypto adoption by retail investors by using crypto trading app downloads as a proxy.
The study found that when the price of Bitcoin rises, there is an increase in new users and that most retail investors download crypto apps when prices are high.
The BIS provided evidence that daily downloads of crypto exchange applications increased between July and November 2021, peaking one month before Bitcoin’s all-time high of just over $69,000.
According to the study, a large number of people who use crypto apps are men under 35. This suggests that they are more likely to be risk-seeking than the average person:
People are using Bitcoin because the price is going up, rather than because they don’t like banks or distrust government institutions.
The study found that, when controlling for global uncertainty or volatility, Bitcoin is not more important than other currencies when it comes to how people decide to invest.
The BIS estimated that app users who downloaded crypto apps in the past year have likely purchased Bitcoin at some point, and that, on average, these users would have lost money if they had invested more than $20,000 in Bitcoin during that time.
The BIS’s assumptions seem to correlate with data from blockchain analysis firm Glassnode, which on November 14 confirmed that over half of Bitcoin addresses are in profit, reaching a two-year low.
Despite strong fundamentals for Bitcoin, turbulence is affecting the blockchain industry.
The study documented the geography of crypto app adoption and found that between Aug. 2015 and June 2022, Turkey, Singapore, the United States, and the United Kingdom had the highest total downloads per 100,000 people.
India had the lowest number of crypto app downloads per 100,000 people, with China seeing only 1,000 downloads per 100,000 people. The BIS opined that greater legal restrictions on crypto hamper retail adoption in those countries.
