1 in every 5 Americans is a cryptocurrency holder? In fact, not that many.

Is 1 in 5 Americans a Cryptocurrency Holder? The Truth Might Surprise You.

Article: JP Koning

Translation: Luffy, Foresight News

You may have recently heard about the “America Loves Cryptocurrency” event sponsored by Coinbase, the largest cryptocurrency exchange in the United States. In order to increase the influence of cryptocurrency owners, Coinbase claims that 52 million American adults currently hold cryptocurrency, accounting for 20% of the adult population in the United States. If true, cryptocurrency users would have significant voting power.

What is the source of the data that Coinbase used to arrive at the conclusion of 20%? It references a survey conducted in February of last year by Morning Consult, which asked 2,202 adults about their current holdings of cryptocurrency.

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If you’ve been following other sources of cryptocurrency adoption data, you may easily notice that Coinbase’s 20% statistical data seems… questionable?

To uncover the truth, let’s take a deep dive into cryptocurrency adoption data in the United States. Here is a brief overview of the best surveys regarding cryptocurrency ownership among Americans. In the following article, I will discuss who they are, how much assets they hold, and why they hold these assets.

1) The pioneer of the American payment survey is the Federal Reserve’s SDCPC (Survey and Diary of Consumer Payment Choice). SDCPC is a long-term data collection effort aimed at gaining a comprehensive understanding of U.S. consumer payment preferences and behavior. As early as 2014, it began including cryptocurrencies in its survey, although cryptocurrencies represent only a small portion of the massive data collected by SDCPC.

The SDCPC is managed by the Understanding America Study group at the University of Southern California. In the 2022 iteration, SDCPC surveyed over 4,761 participants. It’s worth noting that SDCPC includes both a survey and a 3-day diary component. The diary component requires more manpower to manage compared to the survey, but it provides more accurate information by minimizing recall bias.

SDCPC found that in 2022, 9.6% of American adults owned cryptocurrency, higher than the 9.1% in 2021, and significantly higher than the 0.6% reported in the 2015 survey. However, this is far below Coinbase’s claimed 20%. Which of these numbers is correct?

The historical survey results from SDCPC are shown in the following table.

2) Another survey conducted by the Federal Reserve also reveals the adoption of cryptocurrency in the United States. The Federal Reserve’s Survey of Consumer Finances (SCF) examines the financial lives of American adults and their families, making it more comprehensive than the Federal Reserve’s SDCPC, which focuses specifically on payments.

The Federal Reserve’s SCF is managed using the Ipsos KnowledgePanel (Note: Ipsos is a leading global market research group). In 2022, a total of 11,667 participants completed the SCF.

SHED didn’t start covering cryptocurrency-related issues until 2021. The SHED survey found that 10% of Americans used cryptocurrency in 2022, with “use” defined as purchasing, holding, paying, or transferring with cryptocurrency. This figure is slightly lower than the 12% in 2021 (see table below). The number of Americans holding cryptocurrency as an investment (a narrower definition than “use”) decreased from 10% to 8% in 2022.

The SHED data of 8-10% fully confirms the SDCPC’s 9.6% survey results while negating Coinbase’s 20% statistics.

3) The next reliable source of data on cryptocurrency adoption is a group of four economists and financial researchers who use quarterly surveys conducted by Nielsen Homescan, consisting of 80,000 households. The response rate for each survey is 20-25%, representing data from 15,000 to 25,000 respondents.

Weber, Candia, Coibion, and Gorodnichenko (Weber et al.) found that by the end of 2022, the proportion of households owning cryptocurrency had risen to 12%. The black dotted line in the graph below shows the rate’s change over time.

4) The fourth survey was conducted by the Pew Research Center. A survey of 10,701 adults in March 2023 found that 17% of American adults have “ever invested, traded, or used” cryptocurrency. This is a very broad category, which likely includes individuals who randomly bought $25 worth of Bitcoin in 2015, sold it three days later, and never touched it again.

Further research reveals that among the 17% of individuals who have ever owned or used cryptocurrency, 69% said they currently hold some cryptocurrency, meaning that the proportion of American adults who own cryptocurrency reached 11-12% in 2023. This is not far off from the surveys conducted by the Federal Reserve and Weber et al., but it differs greatly from Coinbase’s results.

5) The fifth data source comes from Canada. Considering the cultural and geographical similarities between the two countries, Canadian data can be cross-checked against American data. In two significant Canadian surveys, the first one is the Bitcoin Omnibus Survey (BTCOS) conducted by the Bank of Canada for a long time and managed by Ipsos, which involved participants from three different groups.

In 2022, BTCOS surveyed 1,997 Canadians and found that the proportion of cryptocurrency owners was 10%, lower than the previous year’s 13% (see graph below). This represents the lower limit of this proportion since it only includes Bitcoin owners.

In 2022, BTCOS also discovered that 3.5% of Canadians own Dogecoin, and 4% of Canadians own Ethereum. However, it is not possible to directly add these values to the 10% proportion of Bitcoin owners, as many respondents own multiple types of cryptocurrencies.

The second notable survey in Canada was conducted by the Ontario Securities Commission in 2022, aiming to explore Canadians’ attitudes towards crypto assets. This survey was conducted in collaboration with Ipsos and involved 2,360 Canadians in early 2022. The survey found that 13% of Canadians currently own some form of cryptocurrency, including cryptocurrency ETFs, which are legal in Canada but illegal in the United States.

The Federal Reserve’s two surveys indicate that the proportions of cryptocurrency owners in 2022 are 9.6% and 8-10%, while Weber et al. obtained a result of 12%. Pew Research Center data shows that by early 2023, the percentage of cryptocurrency owners in the United States will reach 11-12%. In Canada, the Bank of Canada calculated that the proportion of Bitcoin owners reached 10% by the end of 2022, and the Ontario Securities Commission concluded that the proportion of cryptocurrency owners in early 2022 was 13%.

Considering this series of data, the adoption rate of 20% reported by Coinbase’s Morning Consult survey is an obvious outlier and may need to be discarded. Cryptocurrency owners in the United States are a potentially significant voting constituency, but not as large as Coinbase would like us to believe.

Nevertheless, I found some other interesting things in Coinbase’s Morning Consult survey that further increased my skepticism. The Morning Consult report states that 8% of respondents currently own USDC, down from 10% in the previous quarter (for more information, see here). The survey also shows that currently 5% of people own USDT. USDC and USDT are stablecoins, and the idea that one in ten Americans owns a specific stablecoin is absurd for anyone closely following cryptocurrencies. Given that Morning Consult has certainly made some mistake, perhaps due to sampling error, it raises doubts about the overall quality of their work. However, even if we ignore Coinbase’s Morning Consult survey, the adoption rate of 9.6% according to SDCPC is still surprisingly high. In just fifteen years, cryptocurrency has gone from a strange niche product to something held by tens of millions of Americans.

What other facts do we know about cryptocurrency owners in the United States?

Holding Scale

According to SDCPC’s data, most American cryptocurrency owners hold a small value of cryptocurrency. Among all the American cryptocurrency owners surveyed, 45% of them only hold cryptocurrencies worth $0-200 in 2022. As shown in the graph below, the median value of held cryptocurrencies is $312. With such a small amount, I doubt if these cryptocurrency owners qualify as long-term cryptocurrency adopters, rather than those who lose interest after seeing Coinbase’s Super Bowl advertisement and buying some Dogecoin.

SDCPC data shows that a quarter of cryptocurrency holders are what I call cryptocurrency purists, holding over $2,000 worth of cryptocurrency. Considering that 90% of Americans don’t hold any cryptocurrency at all, that means there are two out of every 100 Americans who qualify as cryptocurrency purists. Surveys by Weber et al. and Nielsen Homescan corroborate this skewed distribution of cryptocurrency holders. An anomalous group consisting of core hodlers (about 8% of all cryptocurrency holders) allocate their entire investment portfolio to cryptocurrency (see figure below). So far, the largest group of cryptocurrency owners consists of small-scale entrants who only invest 0-5% of their portfolio in cryptocurrency.

Why Hold?

Why do Americans own cryptocurrency? Despite being called “currency”, cryptocurrencies are usually not used as a medium of exchange. Price appreciation is the main motivation for owning them. When SDCPC surveyed participants in 2022 on the “main reasons for owning cryptocurrency”, the most popular answer (67%) was investment (see figure below, orange row). The second most common reason (21%) was “I am interested in new technology.” Respondents rarely listed any type of payment-related use case as their main reason for owning cryptocurrency. As for lack of trust in banks, government, or the US dollar – common cryptocurrency narrative themes – they were seldom mentioned as primary reasons for holding in 2022.

Interestingly, American cryptocurrency owners are not always so obsessed with price appreciation. In 2014, SDCPC found that American cryptocurrency owners had a wide range of motivations, including lack of trust, cross-border payments, and buying goods and services (see figure above, blue row).

Weber et al.’s analysis of Nielsen Homescan survey data echoes investment as the primary motivation for owning cryptocurrency. Respondents could give multiple reasons for owning cryptocurrency, and the most common reason (see figure below) was “expected value growth.” The willingness to use cryptocurrency for international transfers was almost non-existent, as was the desire to “ditch banks.”

The Federal Reserve’s SHED survey yielded the same results as the other two surveys (see table below). Among the 10% of Americans who use cryptocurrencies in 2022, most see it as an investment tool. A small difference is that the SHED report states that by 2022, about 2% of survey participants used cryptocurrencies to send money to family and friends. This suggests that while transaction motivation is not the primary motivation, it may be more common than the previous two surveys showed.

Types of cryptocurrencies held

What cryptocurrencies do Americans love the most? Weber et al. found that among 11% of cryptocurrency holders, 70% hold Bitcoin, with slightly over 40% holding Ethereum and Dogecoin, respectively.

This distribution was echoed in the Federal Reserve’s 2022 SDCPC. Among all surveyed cryptocurrency holders, almost 65% hold Bitcoin, making it the most popular type of cryptocurrency. Meanwhile, 44.8% hold Ethereum and 38% hold Dogecoin. Dogecoin was initially created as a joke in 2013, and approximately 4-5% of all Americans participated in this joke.

Crypto Bros

There’s a reason people use the term “crypto bros.” Without exception, all surveys in the US found that cryptocurrency holders are often young, male, and have higher incomes. The same goes for Canada, where the male-to-female ratio of Bitcoin owners was 3:1 by 2022. Canadian banks also regularly use the “Three Giants” questionnaire to test the financial literacy of Bitcoin owners and found that their financial literacy tends to be lower compared to non-Bitcoin owners.

Interestingly, besides the crypto bros (cryptocurrency holders who tend to be young, male, and wealthy), both Pew Research and the Federal Reserve’s SHED (see table below) found that American cryptocurrency holders are more likely to be Asian, followed by Black and Hispanic individuals, and less likely to be White.

The Federal Reserve’s SHED found that while “investment” remains a driving factor for owning cryptocurrency, and the wealthy use it more than the poor, certain demographic groups tend to rely on it more for transfers. Specifically, SHED found that in low-income households, 5% of families reported holding cryptocurrency for investment purposes, while 4% had motivations for transfers.

All this data points to three prototypes of cryptocurrency holders in the United States.

The primary prototype of cryptocurrency holders is young, wealthy male enthusiasts, most likely non-white, who hold hundreds of dollars’ worth of Dogecoin or other cryptocurrencies to bet on price increases. Coinbase’s campaign “Crypto Owners Are Key Voters” claims that “cryptocurrency owners are crucial voters,” but I doubt this holds true for the dominant participants who might not care much about casually betting $50 on Dogecoin, Litecoin, or Bitcoin, so they may not form a voting group for reasons related to cryptocurrencies.

Another prototype is the rarer cryptocurrency purist, young males who invest most of their savings in cryptocurrencies. I suspect these are the kind of people I encounter on Twitter, spreading the word about cryptocurrencies to anyone willing to listen. This might be a small group, but they are most likely to vote in support of cryptocurrency-related initiatives.

Lastly, it appears that a small segment of the low-income population is using cryptocurrency for actual transfers, which was the original use case envisioned by Satoshi Nakamoto when Bitcoin was introduced in 2008.

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