Report: Majority of Investors Regard Crypto as “Growth Investment”

The research offers a nice counterexample against anyone who would argue that buying into “crypto should be considered akin to gambling,” with a growing number of investors increasingly viewing cryptocurrencies as a legitimate alternative to more traditional investment vehicles such as stocks.

Indeed, other research published this year — in particular from the UK’s Financial Conduct Authority — does indeed show a year-on-year increase in the percentage of traders who regard crypto as a complement to — or replacement of — more familiar assets.

And with banks and other financial institutions becoming more involved in bitcoin and other cryptocurrencies with each passing month, we can only expect this trend to continue in the near and more distant future. Particularly as bitcoin, ethereum and other coins repeatedly hit new all-time highs, recover from dips, and establish themselves at ever-higher price levels.

Consumers Viewing Cryptocurrency as a Growth Investment Vehicle

In fact, consumers list a number of legitimate reasons for investment in cryptocurrencies, belying the myth that crypto is all about speculation and illegal activities.

Source: Statista/Measure

As shown above, aside from a majority of traders using crypto as a growth investment, significant percentages of them buy cryptocurrencies as 1) a store of value, 2) as a means of supporting the development of blockchain technology, and 3) as a hedge against traditional asset classes. You could also add “to experiment with new types of currencies” to this list of positive motivations, insofar as it shows a willingness to learn and advance oneself.

Of course, 45% and 41% of traders in the US and UK still admit to owning cryptocurrency “just for fun” (which might suggest it has something akin to gambling), but this is arguably overshadowed and outweighed by the other, more constructive reasons given. At the same time, the UK’s FCA published its own consumer research in June, revealing that the ‘gambling’ element is weakening each year.

Source: FCA

This chart compares 2021’s results with those from 2020, showing an increase for each positive investment motivation.

That is, compared to one year ago, more people buy cryptocurrencies “instead of buying shares or other financial assets,” “as part of a wider investment portfolio,” and “as part of my long-term savings plan.” Conversely, fewer people buy cryptocurrencies “as a gamble that could make or lose money.”

Legitimization and Becoming Mainstream

This shift in investment motivations has occurred in the context of cryptocurrency becoming more legitimate and mainstream.

While many may point to new all-time highs for bitcoin, ethereum and many altcoins as most notable events of 2021, it’s arguable that the outgoing year was more important for bearing witness to several important developments, developments which are serving to establish cryptocurrencies as more secure markets.

For instance, there was Coinbase’s direct listing in May, which saw the US’ biggest crypto-exchange close its first day of trading with a stock price of $330. Having fallen as low as $220 in June and July, it has risen up to $350 (as of writing), indicating a stabilization of its position and its establishment as a genuinely valuable company sitting atop a genuinely valuable industry.

Likewise, 2021 also saw a number of banks and financial institutions (in the US and elsewhere) launch crypto-related services. Among others, there was US Bank launching a custody service in October, Commonwealth Bank of Australia piloting a similar service in November, BNY Mellon announcing a range of cryptocurrency services in February, BBVA Switzerland opening bitcoin trading services to its private clients in June, Vast Bank rolling out crypto-banking-as-a-service in September, and Singapore’s DBS Bank revealing plans in September to launch its own crypto-exchange.

Skeptics may continue to highlight concerns surrounding crypto’s environmental impact, its association with crime, and the dubiousness of certain stablecoins. But the fact is that 2021 has confirmed cryptocurrency as an emerging part of the preexisting financial system.

This trend is likely to continue, and with it more and more retail traders will regard cryptocurrencies as bona fide investment vehicles, rather than as a new form of gambling.

In turn, this shift in attitudes will result in a shift in market behavior, with fewer retails investors interested in highly speculative memecoins such as Shiba Inu and Dogecoin, and more tending to stick with established cryptocurrencies (e.g. Bitcoin, Ethereum) that have more solid fundamentals.

The knock-on effects don’t stop there, because as more traders come to view cryptocurrency as part of ‘normal’ investment, even more newer traders will come on board, and so on. This will obviously be great news for the likes of Coinbase, which has already seen rocketing daily active user numbers in 2021.

Source: Statista

Another interesting — and positive — ramification will be that we can expect volatility to settle down, with the market avoiding at least some of the big swings (i.e. falls) that had characterised it in previous years.

Source: Statista/CoinDesk

And again, this will all enter into a positive feedback loop, with more institutional investment encouraging more long-term investment behavior from retail traders, and with this reducing boom-and-bust cycles, which in turn will attract more institutional investment, and so on.

In other words, if Statista and Measure were to conduct this survey again next year, there’d be a very good chance that more people would acknowledge buying crypto as a “growth investment,” and fewer saying it’s largely “just for fun.”

And yes, just to confirm that the cryptocurrency market has grown this year, its total cap has surged from $787 billion on January 1 to about $3 trillion today. At the same time, bitcoin and ethereum (to name only two) have risen by 345% and 989% in the last 12 months.

So if that isn’t a growth investment, we’re not sure what is.