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Crypto owners ready to buy the dip: Market report


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Report: Crypto owners are ready to buy more - Photo: Shutterstock

US cryptocurrency owners are ready to “buy the dip” in bitcoin values and take on more digital coins over the next month despite price volatility, according to a new report from market intelligence firm Morning Consult.

“I would say that it shows how optimistic (crypto investors) are,” Charlotte Principato, the report’s author, said Tuesday in an interview with Capital.com. “The more bitcoin someone owns, the more likely they are to be in it for the long run to make money.”

Crypto owners plan to purchase more crypto even as concerns over inflation and Federal Reserve interest rate increases are causing market turmoil, the report states.

Also, most investors own bitcoin, the world’s largest and most valuable currency, and are thinking of purchasing more of it, versus other cryptocurrencies, said Principato, a financial services analyst who leads Morning Consult’s delivery of analysis to the financial services sector.

“Cryptocurrency leaders should know that those who buy the bitcoin dip are predicting big price gains over the next six months, and these investors’s higher risk tolerance will keep them on the bitcoin rollercoaster,” the report states.

Interest not dampened

Retail investors’s interest has not dampened since bitcoin’s and other crypto prices began dropping in November 2021. Last week, 21% of adults questioned in the survey said they are considering purchasing cryptocurrency, matching the percentage willing to invest in November.

That means consumers are less nervous about bitcoin’s price drop this time versus last summer, when overall cryptocurrency purchase consideration dropped to 13% of all US adults from 17% in May.

“But with bitcoin’s signature volatility on full display, its price could drive deeper demographic divides between crypto owners and the general population,” the report states.

The same demographic groups – men, millennials and high-income households – continue to show the most interest in purchasing crypto.

According to a June 2021 Morning Consult report, more bitcoin owners are white than in 2019, but black and Hispanic adults are more likely to consider purchasing bitcoin than white adults or adults of another ethnicity.

Use for sending currency

In the case of hispanic adults, I think the influence is primarily from Latin American countries where cryptocurrency is much more widely adopted already,” Principato said. “In order to send money back and forth, perhaps, or to peers in those countries, hispanic adults have adopted cryptocurrency more readily in the United States.

“In the instance of black adults, I don’t believe it’s controversial to say (they) have been traditionally underserved by the financial services industry and alternative financial services. And, cryptocurrencies offer an opportunity to operate outside of an industry that has traditionally not served them well – and to make money in alternative ways. So I believe that's the one of the driving factors for black adults.”

The June report found that one in five American adults say they own cryptocurrency.

Profit over payments

Upcoming purchases will be for investment purposes rather than to use digital coins as a payment method for buying products – which was the originally intended purpose when Bitcoin was developed, according to the report.

“But I would encourage (retailers and e-commerce leaders)  to think about the chicken or the egg example here, where there aren't as many options to use bitcoin as a payment effectively right now with retailers,” Principato said.

“As those (options) become more available, we'll have to track if that increases people's likelihood to do so. But, certainly, it's important for them to recognize that, right now, most people are using bitcoin to make money, they're not using it to spend money.”

According to the report, risk tolerance increases with the amount of crypto that people own. People with more than $500 in digital assets are about 60% more likely to accept substantial or above-average risks.

Bitcoin owners optimistic

People with more digital assets also believe that the price of bitcoin will rise the most, to $62,439, over the next six months while most US adults expect it to be $27,136.

Bitcoin rebounded above $37,000 on Tuesday after plummeting to its lowest level since July on Monday.

DailyFX analyst Paul RobinAnalysts told Market Watch that, if bitcoin holds above $28,600, it “could rally strongly higher and be in the process of creating a broad range dating back to the early part of 2021,”

However, if bitcoin breaks below that level, then it may “go through an extended bear market lasting quite some time.”

4,400 adults surveyed

Morning Consult conducted a survey of 4,400 US adults from 14 January to 22 January that was weighted according to race and ethnicity, educational background and income. The results have a margin of error of plus or minus 1%.

Principato said it’s important for financial services to understand that crypto investors buy more than just digital currency.

Financial services leaders should try to understand why crypto owners feel that their needs are not being met by the traditional investment sector and are willing to invest in volatile assets instead, she said.

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