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Do You Even Crypto, Bro? Cryptocurrencies in Household Finance

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  • Michael Weber
  • Bernardo Candia
  • Olivier Coibion
  • Yuriy Gorodnichenko

Abstract

Using repeated large-scale surveys of U.S. households, we study the cryptocurrency investment decisions and motives of households relative to other financial assets. Cryptocurrency holders tend to be young, white, male and more libertarian relative to non-crypto holders. They expect much higher rates of returns for crypto and perceive it as relatively safer than do other households. They also view it as a better hedge against inflation. For those holding cryptocurrencies, changes in Bitcoin prices translate into their purchases of durable goods. Finally, exogenously-provided information about historical returns of cryptocurrencies leads individuals to increase their desired crypto holdings and makes them more likely to actually purchase cryptocurrency subsequently. We compare these views and behaviors to those of households toward other financial assets and argue that cryptocurrency is unique in many of these respects.

Suggested Citation

  • Michael Weber & Bernardo Candia & Olivier Coibion & Yuriy Gorodnichenko, 2023. "Do You Even Crypto, Bro? Cryptocurrencies in Household Finance," NBER Working Papers 31284, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:31284
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    References listed on IDEAS

    as
    1. Auer, Raphael & Tercero-Lucas, David, 2022. "Distrust or speculation? The socioeconomic drivers of U.S. cryptocurrency investments," Journal of Financial Stability, Elsevier, vol. 62(C).
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    3. Andreas Hackethal & Tobin Hanspal & Dominique M Lammer & Kevin Rink, 2022. "The Characteristics and Portfolio Behavior of Bitcoin Investors: Evidence from Indirect Cryptocurrency Investments [The investor in structured retail products: advice driven or gambling oriented]," Review of Finance, European Finance Association, vol. 26(4), pages 855-898.
    4. Romano, Joseph P. & Wolf, Michael, 2016. "Efficient computation of adjusted p-values for resampling-based stepdown multiple testing," Statistics & Probability Letters, Elsevier, vol. 113(C), pages 38-40.
    5. Jonathan A. Parker & Antoinette Schoar & Allison T. Cole & Duncan Simester, 2022. "Household Portfolios and Retirement Saving over the Life Cycle," NBER Working Papers 29881, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Di Casola, Paola & Habib, Maurizio Michael & Tercero-Lucas, David, 2023. "Global and local drivers of Bitcoin trading vis-à-vis fiat currencies," Working Paper Series 2868, European Central Bank.

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    More about this item

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • G5 - Financial Economics - - Household Finance

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