A report by the Federal Reserve (Fed) is shedding some light on crypto owners in the United States. As crypto exchanges call for global adoption of cryptocurrencies, where do US consumers stand?
A recent study by the Fed showed that 46% that held crypto as an investment in the United States earn $100,000 or more per annum although 29% earn under $50,000.
source: Federal Reserve
Only 12% of adults used cryptocurrencies in 2021. While the figure may appear relatively low, the younger generation may not have been factored in.
Lower-income individuals were more likely to use cryptocurrencies for transactions rather than investments. According to Stilt, Gen Z and Millennials made up nearly 94% of all crypto buyers in 2021.
The European Central Bank (ECB) provided greater insights into cryptocurrency holders in Europe. It has been estimated that 10% of households in the Eurozone hold cryptocurrencies.
source: ECB
According to the ECB, 37% of crypto owners in the eurozone hold up to 999 euros in cryptocurrencies. Only 8% hold between 15,000 and 30,000 euros.
As stated in the ECB report: “Looking at the income quintiles of the respondents, the pattern is largely U-shaped: the higher a household’s income, the more likely it is to hold crypto-assets, with lower-income households more likely to hold crypto than middle-income households.
“On average, young adult males and highly educated respondents were more likely to invest in crypto-assets in the countries surveyed. With regard to financial literacy, respondents who scored either at the top level or the bottom level in terms of financial literacy scores were highly likely to hold crypto-assets.”
source: ECB
Additionally, the ECB is concerned with the leverage that is offered by exchanges. According to the central bank, the leverage
Leverage
In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders need to rely on leverage to make financial trading viable. Generally, the higher the fluctuation of an instrument, the larger the potential leverage offered by brokers. The market which offers the most leverage is undoubtedly the foreign exchange market, since currency fluctuations are relatively tiny. Of course, traders can select their account leverage, which usually varies from 1:50 to 1:200 on most forex brokers, although many brokers now offer up to 1:500 leverage, meaning for every 1 unit of currency deposited by the trader, they can control up to 500 units of that same currency. For example, if a trader was to deposit $1000 into a forex broker offering 500:1 leverage, it would mean the trader could control up to five hundred times their initial outlay, i.e. half a million dollars. Likewise, if an investor using a 1:200 leveraged account, was trading with $2000, it means they would be actually controlling $400,000, i.e. borrowing an additional $398,000 from the broker. Assuming this investment rises to $402,000 and the trader closes their trade, it means they would have achieved a 100% ROI by pocketing $2000. With leverage, the potential for profit is clear to see. Likewise, it also gives rise to the possibility of losing a much greater amount of their capital, because, had the value of the asset turned against the trader, they could have lost their entire investment.FX Regulators Clamp Down on Leverage Offered by BrokersBack in multiple regulators including the United Kingdom’s Financial Conduct Authority (FCA) took material measures to protect retail clients trading rolling spot forex and contracts for difference (CFDs). The measures followed after years of discussion and the result of a study which showed the vast majority of retail brokerage clients were losing money. The regulations stipulated a leverage cap of 1:50 with newer clients being limited to 1:25 leverage.
In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders need to rely on leverage to make financial trading viable. Generally, the higher the fluctuation of an instrument, the larger the potential leverage offered by brokers. The market which offers the most leverage is undoubtedly the foreign exchange market, since currency fluctuations are relatively tiny. Of course, traders can select their account leverage, which usually varies from 1:50 to 1:200 on most forex brokers, although many brokers now offer up to 1:500 leverage, meaning for every 1 unit of currency deposited by the trader, they can control up to 500 units of that same currency. For example, if a trader was to deposit $1000 into a forex broker offering 500:1 leverage, it would mean the trader could control up to five hundred times their initial outlay, i.e. half a million dollars. Likewise, if an investor using a 1:200 leveraged account, was trading with $2000, it means they would be actually controlling $400,000, i.e. borrowing an additional $398,000 from the broker. Assuming this investment rises to $402,000 and the trader closes their trade, it means they would have achieved a 100% ROI by pocketing $2000. With leverage, the potential for profit is clear to see. Likewise, it also gives rise to the possibility of losing a much greater amount of their capital, because, had the value of the asset turned against the trader, they could have lost their entire investment.FX Regulators Clamp Down on Leverage Offered by BrokersBack in multiple regulators including the United Kingdom’s Financial Conduct Authority (FCA) took material measures to protect retail clients trading rolling spot forex and contracts for difference (CFDs). The measures followed after years of discussion and the result of a study which showed the vast majority of retail brokerage clients were losing money. The regulations stipulated a leverage cap of 1:50 with newer clients being limited to 1:25 leverage. Read this Term has been gradually increasing over the years.
Moreover, the crypto yield farming industry is being monitored by the central bank. Although it is still small in size, the ECB noted it may continue growing at a fast pace.
“ Crypto lending
Crypto Lending
The process of lending cryptocurrency assets with an accrued interest rate and due date is known as crypto lending. The process of crypto lending often occurs through cryptocurrency exchanges or online lending platforms to connect borrowers to lenders. Lenders of crypto lending are comprised of institutional lenders, like hedge funds and asset managers, individual participants, or entities seeking to accrue interest. On the opposite end of the spectrum, borrowers of crypto lending include market makers, proprietary traders, investment managers, hedge funds, traders.These entities or individuals look to short the market, arbitrage-based traders, or entities who need to fulfill an obligation with another party. Different Types of Crypto LendingWhile the process of crypto lending is simply, there are four types of crypto lending practices that traders should familiarize themselves with.Companies, individuals, or entities who possess an excess of cryptocurrencies can earn additional cryptocurrencies through crypto lending. Crypto-to-crypto lending materializes in the form of a smart contract, where crypto lenders can earn interest for a specific period. Common cryptocurrencies that are lent include Bitcoin, Ethereum, and Altcoins. Two examples of crypto-to-crypto lending include Nuo and Coincheck. Moreover, margin lending is a new type of crypto lending, which enables lenders to fund varying cryptocurrencies to borrowers as opposed to a single crypto asset. Typically, lenders of margin lending fix their interest rate and contract duration while occurring over a centralized platform such as Nuo and Bitfinex. While less common, crypto-to-fiat lending occurs when individuals, businesses, or entities require cash. Cryptocurrencies are used as collateral while the lender receives a fiat return which generally is credited to a linked bank account. Finally, crypto-credit lending occurs when entities need capital. Opposed to peer-to-peer (P2P) lending, crypto-credit lending places less emphasis on credit history although this comes with a sacrifice of regulation.
The process of lending cryptocurrency assets with an accrued interest rate and due date is known as crypto lending. The process of crypto lending often occurs through cryptocurrency exchanges or online lending platforms to connect borrowers to lenders. Lenders of crypto lending are comprised of institutional lenders, like hedge funds and asset managers, individual participants, or entities seeking to accrue interest. On the opposite end of the spectrum, borrowers of crypto lending include market makers, proprietary traders, investment managers, hedge funds, traders.These entities or individuals look to short the market, arbitrage-based traders, or entities who need to fulfill an obligation with another party. Different Types of Crypto LendingWhile the process of crypto lending is simply, there are four types of crypto lending practices that traders should familiarize themselves with.Companies, individuals, or entities who possess an excess of cryptocurrencies can earn additional cryptocurrencies through crypto lending. Crypto-to-crypto lending materializes in the form of a smart contract, where crypto lenders can earn interest for a specific period. Common cryptocurrencies that are lent include Bitcoin, Ethereum, and Altcoins. Two examples of crypto-to-crypto lending include Nuo and Coincheck. Moreover, margin lending is a new type of crypto lending, which enables lenders to fund varying cryptocurrencies to borrowers as opposed to a single crypto asset. Typically, lenders of margin lending fix their interest rate and contract duration while occurring over a centralized platform such as Nuo and Bitfinex. While less common, crypto-to-fiat lending occurs when individuals, businesses, or entities require cash. Cryptocurrencies are used as collateral while the lender receives a fiat return which generally is credited to a linked bank account. Finally, crypto-credit lending occurs when entities need capital. Opposed to peer-to-peer (P2P) lending, crypto-credit lending places less emphasis on credit history although this comes with a sacrifice of regulation. Read this Term has spurred ‘yield farming’ investment strategies such as incentivising investors to lend their crypto-assets to a pool that helps provide liquidity to DeFi systems while offering potential investors the highest possible returns at all times. Currently, the crypto-asset deposit/lending industry is still quite small compared with traditional banking, although it could continue to grow rapidly.”
Are We in Front of a ‘Crypto Boom?’
Geoffrey R. Hunter, the Co-Founder & COO of Blockchain Asset Management, shares his views on the recent survey. Blockchain Asset Management is a crypto hedge fund that was launched this year, focusing on web 3.0, GameFi, the Metaverse and NFTs.
A big portion of the fund will be diversifying a portion of bitcoin miners’ intake in to the altcoin market. The other portion is with individual accredited investors.
“High earners tend to have ‘extra money’ to speculate on more risker investments than most,” said Hunter.
“Even though, personally, I feel that we are in the golden era of crypto very similar to the tech boom in the 90’s. It’s a once in a generation type of opportunity that can set you up for life.
“This is why I believe the low-income individuals are investing trying to pick the next bitcoin. You’ve seen what returns are possible with the examples of Doge and Shiba Inu.
“I don’t particularly recommend those, but it can become very enticing. I see the trend picking up as we see crypto getting adopted and more recognized across the major companies.”
Hunter added that he anticipates the upcoming regulations to have a positive impact on crypto investors.
Crypto Investing Trends 2022
JPMorgan’s strategists are expecting Bitcoin to trade higher, estimating the cryptocurrency to be undervalued by 28%:
‘The past month’s crypto market correction looks more like capitulation relative to last January/February and going forward we see upside for bitcoin and crypto markets more generally.’
JPMorgan target for bitcoin is $38,000 while the long-term target is $150,000.
The newly released projection may draw more investments into cryptocurrencies. Aside bitcoin, the investment bank also views cryptocurrencies as its preferred alternative asset class, which replaced real estate due high mortgage rates:
‘We thus replace real estate with digital assets as our preferred alternative asset class along with hedge funds.’
The strategists made their analysis after Terra Luna collapsed. Although the crypto markets sentiment has been affected, venture capital funding into the crypto markets remains firm.
Although it may be unrelated, Andreessen Horowitz (a16z) announced on Wednesday that a new crypto fund worth $4.5 billion has been launched.
More companies are likely to accelerate their entrance to crypto universe due to BTC lower price and bullish projections. When Bitcoin begins correcting higher we may witness the middle-class joining the trend as it is likely to be hyped by media publishers.
Crypto exchanges may benefit the most as the flow of new traders into the crypto markets may increase substantially.
A report by the Federal Reserve (Fed) is shedding some light on crypto owners in the United States. As crypto exchanges call for global adoption of cryptocurrencies, where do US consumers stand?
A recent study by the Fed showed that 46% that held crypto as an investment in the United States earn $100,000 or more per annum although 29% earn under $50,000.
source: Federal Reserve
Only 12% of adults used cryptocurrencies in 2021. While the figure may appear relatively low, the younger generation may not have been factored in.
Lower-income individuals were more likely to use cryptocurrencies for transactions rather than investments. According to Stilt, Gen Z and Millennials made up nearly 94% of all crypto buyers in 2021.
The European Central Bank (ECB) provided greater insights into cryptocurrency holders in Europe. It has been estimated that 10% of households in the Eurozone hold cryptocurrencies.
source: ECB
According to the ECB, 37% of crypto owners in the eurozone hold up to 999 euros in cryptocurrencies. Only 8% hold between 15,000 and 30,000 euros.
As stated in the ECB report: “Looking at the income quintiles of the respondents, the pattern is largely U-shaped: the higher a household’s income, the more likely it is to hold crypto-assets, with lower-income households more likely to hold crypto than middle-income households.
“On average, young adult males and highly educated respondents were more likely to invest in crypto-assets in the countries surveyed. With regard to financial literacy, respondents who scored either at the top level or the bottom level in terms of financial literacy scores were highly likely to hold crypto-assets.”
source: ECB
Additionally, the ECB is concerned with the leverage that is offered by exchanges. According to the central bank, the leverage
Leverage
In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders need to rely on leverage to make financial trading viable. Generally, the higher the fluctuation of an instrument, the larger the potential leverage offered by brokers. The market which offers the most leverage is undoubtedly the foreign exchange market, since currency fluctuations are relatively tiny. Of course, traders can select their account leverage, which usually varies from 1:50 to 1:200 on most forex brokers, although many brokers now offer up to 1:500 leverage, meaning for every 1 unit of currency deposited by the trader, they can control up to 500 units of that same currency. For example, if a trader was to deposit $1000 into a forex broker offering 500:1 leverage, it would mean the trader could control up to five hundred times their initial outlay, i.e. half a million dollars. Likewise, if an investor using a 1:200 leveraged account, was trading with $2000, it means they would be actually controlling $400,000, i.e. borrowing an additional $398,000 from the broker. Assuming this investment rises to $402,000 and the trader closes their trade, it means they would have achieved a 100% ROI by pocketing $2000. With leverage, the potential for profit is clear to see. Likewise, it also gives rise to the possibility of losing a much greater amount of their capital, because, had the value of the asset turned against the trader, they could have lost their entire investment.FX Regulators Clamp Down on Leverage Offered by BrokersBack in multiple regulators including the United Kingdom’s Financial Conduct Authority (FCA) took material measures to protect retail clients trading rolling spot forex and contracts for difference (CFDs). The measures followed after years of discussion and the result of a study which showed the vast majority of retail brokerage clients were losing money. The regulations stipulated a leverage cap of 1:50 with newer clients being limited to 1:25 leverage.
In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders need to rely on leverage to make financial trading viable. Generally, the higher the fluctuation of an instrument, the larger the potential leverage offered by brokers. The market which offers the most leverage is undoubtedly the foreign exchange market, since currency fluctuations are relatively tiny. Of course, traders can select their account leverage, which usually varies from 1:50 to 1:200 on most forex brokers, although many brokers now offer up to 1:500 leverage, meaning for every 1 unit of currency deposited by the trader, they can control up to 500 units of that same currency. For example, if a trader was to deposit $1000 into a forex broker offering 500:1 leverage, it would mean the trader could control up to five hundred times their initial outlay, i.e. half a million dollars. Likewise, if an investor using a 1:200 leveraged account, was trading with $2000, it means they would be actually controlling $400,000, i.e. borrowing an additional $398,000 from the broker. Assuming this investment rises to $402,000 and the trader closes their trade, it means they would have achieved a 100% ROI by pocketing $2000. With leverage, the potential for profit is clear to see. Likewise, it also gives rise to the possibility of losing a much greater amount of their capital, because, had the value of the asset turned against the trader, they could have lost their entire investment.FX Regulators Clamp Down on Leverage Offered by BrokersBack in multiple regulators including the United Kingdom’s Financial Conduct Authority (FCA) took material measures to protect retail clients trading rolling spot forex and contracts for difference (CFDs). The measures followed after years of discussion and the result of a study which showed the vast majority of retail brokerage clients were losing money. The regulations stipulated a leverage cap of 1:50 with newer clients being limited to 1:25 leverage. Read this Term has been gradually increasing over the years.
Moreover, the crypto yield farming industry is being monitored by the central bank. Although it is still small in size, the ECB noted it may continue growing at a fast pace.
“ Crypto lending
Crypto Lending
The process of lending cryptocurrency assets with an accrued interest rate and due date is known as crypto lending. The process of crypto lending often occurs through cryptocurrency exchanges or online lending platforms to connect borrowers to lenders. Lenders of crypto lending are comprised of institutional lenders, like hedge funds and asset managers, individual participants, or entities seeking to accrue interest. On the opposite end of the spectrum, borrowers of crypto lending include market makers, proprietary traders, investment managers, hedge funds, traders.These entities or individuals look to short the market, arbitrage-based traders, or entities who need to fulfill an obligation with another party. Different Types of Crypto LendingWhile the process of crypto lending is simply, there are four types of crypto lending practices that traders should familiarize themselves with.Companies, individuals, or entities who possess an excess of cryptocurrencies can earn additional cryptocurrencies through crypto lending. Crypto-to-crypto lending materializes in the form of a smart contract, where crypto lenders can earn interest for a specific period. Common cryptocurrencies that are lent include Bitcoin, Ethereum, and Altcoins. Two examples of crypto-to-crypto lending include Nuo and Coincheck. Moreover, margin lending is a new type of crypto lending, which enables lenders to fund varying cryptocurrencies to borrowers as opposed to a single crypto asset. Typically, lenders of margin lending fix their interest rate and contract duration while occurring over a centralized platform such as Nuo and Bitfinex. While less common, crypto-to-fiat lending occurs when individuals, businesses, or entities require cash. Cryptocurrencies are used as collateral while the lender receives a fiat return which generally is credited to a linked bank account. Finally, crypto-credit lending occurs when entities need capital. Opposed to peer-to-peer (P2P) lending, crypto-credit lending places less emphasis on credit history although this comes with a sacrifice of regulation.
The process of lending cryptocurrency assets with an accrued interest rate and due date is known as crypto lending. The process of crypto lending often occurs through cryptocurrency exchanges or online lending platforms to connect borrowers to lenders. Lenders of crypto lending are comprised of institutional lenders, like hedge funds and asset managers, individual participants, or entities seeking to accrue interest. On the opposite end of the spectrum, borrowers of crypto lending include market makers, proprietary traders, investment managers, hedge funds, traders.These entities or individuals look to short the market, arbitrage-based traders, or entities who need to fulfill an obligation with another party. Different Types of Crypto LendingWhile the process of crypto lending is simply, there are four types of crypto lending practices that traders should familiarize themselves with.Companies, individuals, or entities who possess an excess of cryptocurrencies can earn additional cryptocurrencies through crypto lending. Crypto-to-crypto lending materializes in the form of a smart contract, where crypto lenders can earn interest for a specific period. Common cryptocurrencies that are lent include Bitcoin, Ethereum, and Altcoins. Two examples of crypto-to-crypto lending include Nuo and Coincheck. Moreover, margin lending is a new type of crypto lending, which enables lenders to fund varying cryptocurrencies to borrowers as opposed to a single crypto asset. Typically, lenders of margin lending fix their interest rate and contract duration while occurring over a centralized platform such as Nuo and Bitfinex. While less common, crypto-to-fiat lending occurs when individuals, businesses, or entities require cash. Cryptocurrencies are used as collateral while the lender receives a fiat return which generally is credited to a linked bank account. Finally, crypto-credit lending occurs when entities need capital. Opposed to peer-to-peer (P2P) lending, crypto-credit lending places less emphasis on credit history although this comes with a sacrifice of regulation. Read this Term has spurred ‘yield farming’ investment strategies such as incentivising investors to lend their crypto-assets to a pool that helps provide liquidity to DeFi systems while offering potential investors the highest possible returns at all times. Currently, the crypto-asset deposit/lending industry is still quite small compared with traditional banking, although it could continue to grow rapidly.”
Are We in Front of a ‘Crypto Boom?’
Geoffrey R. Hunter, the Co-Founder & COO of Blockchain Asset Management, shares his views on the recent survey. Blockchain Asset Management is a crypto hedge fund that was launched this year, focusing on web 3.0, GameFi, the Metaverse and NFTs.
A big portion of the fund will be diversifying a portion of bitcoin miners’ intake in to the altcoin market. The other portion is with individual accredited investors.
“High earners tend to have ‘extra money’ to speculate on more risker investments than most,” said Hunter.
“Even though, personally, I feel that we are in the golden era of crypto very similar to the tech boom in the 90’s. It’s a once in a generation type of opportunity that can set you up for life.
“This is why I believe the low-income individuals are investing trying to pick the next bitcoin. You’ve seen what returns are possible with the examples of Doge and Shiba Inu.
“I don’t particularly recommend those, but it can become very enticing. I see the trend picking up as we see crypto getting adopted and more recognized across the major companies.”
Hunter added that he anticipates the upcoming regulations to have a positive impact on crypto investors.
Crypto Investing Trends 2022
JPMorgan’s strategists are expecting Bitcoin to trade higher, estimating the cryptocurrency to be undervalued by 28%:
‘The past month’s crypto market correction looks more like capitulation relative to last January/February and going forward we see upside for bitcoin and crypto markets more generally.’
JPMorgan target for bitcoin is $38,000 while the long-term target is $150,000.
The newly released projection may draw more investments into cryptocurrencies. Aside bitcoin, the investment bank also views cryptocurrencies as its preferred alternative asset class, which replaced real estate due high mortgage rates:
‘We thus replace real estate with digital assets as our preferred alternative asset class along with hedge funds.’
The strategists made their analysis after Terra Luna collapsed. Although the crypto markets sentiment has been affected, venture capital funding into the crypto markets remains firm.
Although it may be unrelated, Andreessen Horowitz (a16z) announced on Wednesday that a new crypto fund worth $4.5 billion has been launched.
More companies are likely to accelerate their entrance to crypto universe due to BTC lower price and bullish projections. When Bitcoin begins correcting higher we may witness the middle-class joining the trend as it is likely to be hyped by media publishers.
Crypto exchanges may benefit the most as the flow of new traders into the crypto markets may increase substantially.
