The Market Might Be Bearish But Crypto Adoption Continues to Rise

Short and Long-Term Increases in Cryptocurrency Adoption and Ownership

Published by personal finance website Finder.com, the survey of 27 different nations reveals that a majority have witnessed a growth in cryptocurrency ownership in merely a couple of months.

Source: Finder.com

What the table above reveals is that, between October 2021 and December 2021, cryptocurrency ownership increased in 21 nations and decreased in only one (while data for October is lacking for five countries). Overall, the ‘world’ saw an increase in cryptocurrency ownership overall between these two months, from 11.2% to 15.5%.

And to clarify, this is current ownership, meaning that the participants in the survey held cryptocurrency at the time they were quizzed. In other words, we would have likely seen even higher percentages if the survey had asked whether respondents had held cryptocurrency at any point in the last 12 months (or ever). It’s also worth pointing out that the survey missed a few countries — such as Turkey, Cuba, Ukraine, India and El Salvador — where ownership is likely to be particularly high.

Either way, the picture that emerges is one of a growth in cryptocurrency ownership. And if skeptics are tempted to argue that Finder’s survey probably isn’t very scientific, it’s backed up by other, more rigorous studies.

Most notably, Chainalysis released its Geography of Cryptocurrency Report 2021 in October, again showing increases in ownership over medium and longer term timeframes. One of its conclusions was that “cryptocurrency adoption is skyrocketing.”

In particular, the report — which uses on-chain data for 154 nations and measures this against PPP (purchasing power parity) per capita data — found that cryptocurrency adoption worldwide has increased by “over 2300% since Q3 2019 and over 881% in the last year.” More specifically, this is adoption in the sense of on-chain value received and in terms of trading volume.

Source: Chainalysis

This is staggering growth, and underlines just how much of a big year crypto had in 2021. And according to Chainalysis, it had a big year for reasons which vary according to where you are in the world.

“In emerging markets, many turn to cryptocurrency to preserve their savings in the face of currency devaluation, send and receive remittances, and carry out business transactions; in North America, Western Europe, and Eastern Asia, by contrast, adoption over the last year has been driven largely by institutional investment,” the report concludes.

Why the Data is Good News for Crypto

Anyone playing devil’s advocate might argue that this ‘adoption’ data may be temporary or short-lived, in that more people may have entered the cryptocurrency market during the October-November rally, but have likely sold their holdings and disappeared now that bitcoin, for instance, has fallen by 39% since it reached an all-time high of $69,044 on November 10.

This is quite probably true, but it doesn’t change the fact that more people have now owned cryptocurrency than ever before. This is important in establishing a base of familiar and receptive people who can re-enter the market and sector once it picks up again.

And available data suggests that this base is only going to increase in the coming years. In particular, Finder.com’s survey data shows that, in pretty much every country, cryptocurrency ownership strongly tends to veer towards younger groups and generations.

Globally, 54.8% of cryptocurrency owners are aged between 18 and 34, while ownership for the 35-to-54 age group is 30.5%. By contrast, it’s only 14.7% for those aged 55 or above.

What this suggests is that cryptocurrency ownership and use is an activity of the young. More importantly, it suggests that as Millennials and Generation Zers age and come to occupy the demographic slots once occupied by Baby Boomers, ownership will become more pervasive throughout society as a whole. And with newer generations (younger than Generation Z) likely to be even more open to cryptocurrency ownership (because they’re growing up in a world where it’s becoming increasingly normal), the future could very well see even higher percentages of cryptocurrency adoption.

Demographic change might seem like an indirect mechanism for achieving widespread cryptocurrency ownership, but it’s a mechanism that’s being increasingly pointed to in other areas. For example, this mechanism is being highlighted as being active in politics by a number of journalists and authors, while less controversially analysts have also noted it in fashion, to take another example. Basically, the ideas is that, as older generations disappear, there aversion to certain things is replaced for an increasing embrace of them.

It’s very probable that we’ll see this in crypto, at least over the next one or two decades. This means that anyone interested in a really big payoff may need to hold onto their cryptocurrency for a particularly long time. Still, with the short-term game being notably dangerous (especially now), it is the only strategy with a reasonable chance of succeeding for most investors.