- Crypto assets and digital assets have plunged in value this year amid fears of inflation and recession.
- But that hasn’t dampened interest in digital assets and cryptocurrencies, a Bank of America survey shows.
- Ninety-one percent of those surveyed say that they still plan to buy cryptocurrencies in the next six months.
The spectacular fall in cryptocurrencies has not at all deterred people’s interest in digital assets, according to Bank of America.
Ninety-one percent of the 1,013 people surveyed by the bank in early June said they expect to buy cryptocurrencies in the next 6 months. That’s the same percentage as those who actually bought in the last 6 months, BofA noted.
This may be surprising to some considering how far crypto units have fallen as inflation and recession fears take hold of the market. Bitcoin has lost two-thirds of its value since its all-time high in early November, and TerraUSD and its sister coin Luna’s one-to-one peg collapsed in May, proving that sometimes stablecoins aren’t necessarily stable. TerraUSD and Luna are practically worthless now and lawsuits have been filed.
And it’s not over. On Tuesday, Coinbase Global announced plans to cut around 1,100 jobs, or about 18% of its global workforce, as part of a restructuring to help manage its operating expenses in response to current market conditions.
The news followed Monday’s news from crypto lender Celsius, which told customers that they are temporarily unable to withdraw funds from the platform.
Despite all this, there are still buyers, BofA said.
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What does the crypto/digital asset survey say about the market?
“Despite the sharp correction in cryptocurrency valuations, consumer interest in the sector remains strong,” BofA analysts said in the report.
Around 9 out of 10 cryptocurrency and digital asset users and potential users plan to buy cryptocurrency in the next 6 months, the same percentage of people who actually bought in the last 6 months.
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Thirty percent said they did not plan to sell any of their holdings in the next 6 months, and the same percentage said they had not sold any of their holdings in the last 6 months. Still, the majority were primarily short-term investors, with 77% typically holding their crypto or digital asset for less than a year.
The most common crypto transaction was worth less than $25. PayPal, SoFi and Square CashApp users tended to have smaller average purchase sizes and lower incomes than those who used Coinbase and Crypto.com for their transactions, the investment bank said.
Why do people want cryptocurrencies?
Of the 58% of respondents who currently own crypto or digital assets, said their main reasons for investing were expectations of price appreciation, portfolio diversification and interest in technology and enjoying being part of the crypto community.
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39% used crypto to make purchases online, with 49% interested in doing so. Meanwhile, 34% used crypto to buy things in person, with 53% interested in doing so.
“We believe this could be explained by the growing popularity of products that allow the use of stored crypto balances for consumer-to-merchant transactions, whereby an intermediary (such as PayPal through its Checkout With Crypto service or Visa through its Coinbase card) converts cryptocurrency into fiat currency before the merchant is paid,” the analysts said.
Only 10% of those who used crypto as a payment method said they did not plan to do so again, mainly due to “lack of merchant acceptance” (23%).
How much crypto do people hold in their wallets?
Most people own only a small amount, with 65% having less than 10% of their total investment portfolios invested in cryptocurrencies or other digital assets. Only 5% said that the majority of their portfolio was invested in cryptocurrencies or other digital assets.
What are the most popular digital assets that people own?
The most common cryptocurrencies people own are Bitcoin and Ethereum at 75% and 44% respectively. Meme coins like DogeCoin and Shibu Inu came in second at 26%, followed by stablecoins at 12%. Amazingly, 8% still owned TerraUSD even though it is basically useless now.
NFTs, or non-fungible tokens, are also popular. Among those who currently own crypto assets or digital assets, 38% own an NFT.
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More than 50% of respondents who own some kind of crypto or digital asset said they plan to buy NFTs in the coming months.
Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and sign up for our free Daily Money newsletter for personal finance tips and business news Monday through Friday mornings.
Associated Press contributed to this report.
