A new study has found that most people who enter the cryptocurrency market lose money, and these people are young.
The study was published by the famous bank of central banks, the so-called Central Bank for International Settlements. It was based on nearly seven years old data from the Apple and Google Play stores.
First, population. Turkey, Singapore, the United States and the United Kingdom have the highest adoption rates per million. The largest group of users is men under 35, followed by men aged 35 to 54. About a third of cryptocurrency application users worldwide are women.
Nearly three-quarters, or 73%, downloaded their app when the price of Bitcoin was above $20,000. If you invest the day of downloading the app, you're underwater. BitcoinBTCUSD,
The survey also shows that larger investors, known as "gorgers," with more than 100,000 bitcoins in their portfolios tend to sell when smaller investors are buying.
Research shows that as the price of Bitcoin increases, so do the number of new users. On average, a one percentage point increase in Bitcoin price corresponds to a 1.1% increase in average monthly active users.
When looking at other macro factors such as stock market activity, gold prices or economic policy uncertainty, the correlation between cryptocurrency downloads is most closely tied to the price of Bitcoin.
And it was the youth who were most sensitive to Bitcoin's price swings. This is consistent with the idea that rising prices attract speculative users with high risk appetite.
Paul Donovan, chief economist at UBS Global Wealth Management, said the study shows why the cryptocurrency crisis has not spilled over into the real economy. “People who lose wealth tend to save more and spend less. However, the wealth effect is more likely to apply to individuals who view cryptocurrency as an investment rather than a bet.”
He added that young people pay less attention to consumer spending than older consumers.