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Distrust or speculation? the socioeconomic drivers of U.S. cryptocurrency investments

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  • Raphael Auer
  • David Tercero-Lucas

Abstract

Employing representative data from the U.S. Survey of Consumer Payment Choice, we disprove the hypothesis that cryptocurrency investors are motivatedby distrust in fiat currencies or regulated finance. Compared with the general population, investors show no differences in their level of security concerns with either cash or commercial banking services. We find that cryptocurrency investors tend to be educated, young and digital natives. In recent years, a gap in ownership of cryptocurrencies across genders has emerged. We examine how investor characteristics vary across cryptocurrencies and show that owners of cryptocurrencies increasingly tend to hold their investment for longer periods.

Suggested Citation

  • Raphael Auer & David Tercero-Lucas, 2021. "Distrust or speculation? the socioeconomic drivers of U.S. cryptocurrency investments," BIS Working Papers 951, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:951
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    Cited by:

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    2. Raphael Auer & Giulio Cornelli & Sebastian Doerr & Jon Frost & Leonardo Gambacorta, 2022. "Crypto trading and Bitcoin prices: evidence from a new database of retail adoption," BIS Working Papers 1049, Bank for International Settlements.
    3. Raphael A. Auer, 2022. "Embedded Supervision: How to Build Regulation into Decentralised Finance," CESifo Working Paper Series 9771, CESifo.
    4. Feyen,Erik H.B. & Kawashima,Yusaku & Mittal,Raunak, 2022. "Crypto-Assets Activity around the World : Evolution and Macro-Financial Drivers," Policy Research Working Paper Series 9962, The World Bank.
    5. Colombo, Jéfferson Augusto & Yarovaya, Larisa, 2024. "Are crypto and non-crypto investors alike? Evidence from a comprehensive survey in Brazil," Technology in Society, Elsevier, vol. 76(C).
    6. Kreppmeier, Julia & Laschinger, Ralf & Steininger, Bertram & Dorfleitner, Gregor, 2023. "Real Estate Security Token Offerings and the Secondary Market: Driven by Crypto Hype or Fundamentals?," Working Paper Series 23/6, Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance.
    7. Anantha Divakaruni & Peter Zimmerman, 2024. "Uncovering Retail Trading in Bitcoin: The Impact of COVID-19 Stimulus Checks," Management Science, INFORMS, vol. 70(4), pages 2066-2085, April.
    8. Goel, Rajeev K. & Mazhar, Ummad, 2024. "Cryptocurrency use and tax collections: Direct and indirect channels of influence," Journal of Financial Stability, Elsevier, vol. 72(C).
    9. Chiara Oldani & Giovanni S. F. Bruno & Marcello Signorelli, 2024. "Economic policy uncertainty and cryptocurrencies," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 14(3), pages 709-728, September.
    10. Griffith, Todd & Clancey-Shang, Danjue, 2023. "Cryptocurrency regulation and market quality," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 84(C).
    11. 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.
    12. Nils Brouwer & Jakob de Haan, 2024. "What Drives Households’ Knowledge about Cryptocurrencies?," Working Papers 799, DNB.
    13. Álvaro Hernández Sánchez & Beatriz María Sastre-Hernández & Javier Jorge-Vazquez & Sergio Luis Náñez Alonso, 2024. "Cryptocurrencies, Tax Ignorance and Tax Noncompliance in Direct Taxation: Spanish Empirical Evidence," Economies, MDPI, vol. 12(3), pages 1-25, March.
    14. Levkov Nikola & Bogoevska-Gavrilova Irena & Trajkovska Milica, 2022. "Profile and Financial Behaviour of Crypto Adopters – Evidence from Macedonian Population Survey," South East European Journal of Economics and Business, Sciendo, vol. 17(2), pages 172-185, December.
    15. Ante, Lennart & Wazinski, Friedrich-Philipp & Saggu, Aman, 2023. "Digital real estate in the metaverse: An empirical analysis of retail investor motivations," Finance Research Letters, Elsevier, vol. 58(PA).
    16. Kreppmeier, Julia & Laschinger, Ralf & Steininger, Bertram I. & Dorfleitner, Gregor, 2023. "Real estate security token offerings and the secondary market: Driven by crypto hype or fundamentals?," Journal of Banking & Finance, Elsevier, vol. 154(C).
    17. Sergio Luis Náñez Alonso & Javier Jorge-Vázquez & Miguel Ángel Echarte Fernández & Ricardo Francisco Reier Forradellas, 2021. "Cryptocurrency Mining from an Economic and Environmental Perspective. Analysis of the Most and Least Sustainable Countries," Energies, MDPI, vol. 14(14), pages 1-22, July.
    18. Marinela BÃRBULESCU & Alina HAGIU, 2022. "The Connotations Of The Crisis On The Cryptoassets Market," Scientific Bulletin - Economic Sciences, University of Pitesti, vol. 21(3), pages 123-136.
    19. Shimeng Shi, 2022. "Bitcoin futures risk premia," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 42(12), pages 2190-2217, December.
    20. Sergio Luis Náñez Alonso & Javier Jorge-Vázquez & Miguel Ángel Echarte Fernández & David Sanz-Bas, 2024. "Bitcoin’s bubbly behaviors: does it resemble other financial bubbles of the past?," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.
    21. Alaminos, David & Guillén-Pujadas, Miguel & Vizuete-Luciano, Emili & Merigó, José María, 2024. "What is going on with studies on financial speculation? Evidence from a bibliometric analysis," International Review of Economics & Finance, Elsevier, vol. 89(PB), pages 429-445.
    22. Weber, Michael & Candia, Bernardo & Coibion, Olivier & Gorodnichenko, Yuriy, 2023. "Do You Even Crypto, Bro? Cryptocurrencies in Household Finance," IZA Discussion Papers 16335, Institute of Labor Economics (IZA).
    23. Alnasaa, Marwa & Gueorguiev, Nikolay & Honda, Jiro & Imamoglu, Eslem & Mauro, Paolo & Primus, Keyra & Rozhkov, Dmitriy, 2022. "Crypto-assets, corruption, and capital controls: Cross-country correlations," Economics Letters, Elsevier, vol. 215(C).
    24. Amin Izadyar & Shiva Zamani, 2022. "Investor base and idiosyncratic volatility of cryptocurrencies," Papers 2211.13274, arXiv.org.

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    More about this item

    Keywords

    digital currencies; cryptocurrencies; distributed ledger technology; blockchain; payments; digitalisation; banking; household finance; money; bitcoin; ether; xrp; bitcoin cash; litecoin; stellar; eos;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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