The number of cryptocurrency owners worldwide increased to 425 million people last year, according to Crypto.com’s Crypto Market Sizing Report 2022. This figure represents a 39% increase over 2021, an increase that came amid one of the worst declines in the short history of the cryptocurrency market. The fact that ownership has increased despite substantial price declines should offer some hope that, even in a bear market, the cryptocurrency industry will remain in strong health, to the extent that much of the global public maintains a growing interest in virtual currencies such as Bitcoin, Ethereum and the rest.
Speaking of Ethereum, Crypto.com’s report found that it had a better 2022 than most major cryptocurrencies, with Ethereum ownership increasing 263% over the past 12 months, from $24 million to $87 million. In contrast, bitcoin ownership increased by 20%, from 183 million in January to 219 million.
Along with other recent cryptocurrency ownership reports confirming the same underlying trend, what Crypto.com’s research points out is that Ethereum could end up expanding much faster than Bitcoin during the next bull market. This may be especially true in view of Ethereum’s shift to proof-of-stake and its becoming deflationary, not to mention that most dapps within the cryptocurrency ecosystem already rely on it.
Cryptocurrency owners will rise to 425 million worldwide in 2022, a trend that continues
Released late last month, Crypto.com’s report offers an additional dose of hope in what remains a bear market (despite recent recoveries). What is particularly encouraging is that, without exception, each month has seen a growth in the number of properties, even after the collapse of Terra in May and the bankruptcy of FTX in November.
There are probably a number of reasons for this.
For starters, even with falling prices, rampant inflation across much of the world has caused people in some nations to still turn to Bitcoin (and other coins) at various times of the year to preserve at least some of their fragile wealth. This is especially true in economically distressed nations like Turkey, where the official inflation rate has exceeded 70% and where over 5.5 million people have bought cryptocurrency of some kind. It was also evident in Argentina, where not only did cryptocurrency ownership increase in 2022, but where 53% of residents who owned cryptocurrencies owned stablecoins in particular.
Much the same goes for countries like Nigeria, Lebanon, and Iran, while Ukraine and Russia saw a surge in bitcoin and cryptocurrency trading after their conflict began in February 2022. However, trying to avoid inflation and other economic ills was not the only driver of cryptocurrency ownership last year. Equally important was the increasing use, something evidenced by the fact above that Ethereum has witnessed such a spike in ownership.
That is, 2022 has also seen great growth in the use of NFTs, with Web3 and “the metaverse” becoming very fashionable among various brands, fashion houses and companies. It seemed like everyone from Nike to Starbucks launched their own non-fungible tokens last year, with the vast majority using Ethereum or one of its tier two sidechains (e.g. Polygon). As such, demand for Ethereum itself – as a means of acquiring or selling NFTs – reflected this growth.
Other trends, other relationships
Other recent reports reinforce Crypto.com’s research, finding that cryptocurrency ownership increased last year, defying all skeptics who participated in schadenfreude to declare that “crypto is dead” (once again).
For example, rival trading platform eToro released its Retail Investors Beat report in January of this year. Based on a survey of 10,000 investors in 13 countries and three continents, one of its main conclusions was that cryptocurrency ownership increased during each quarter of 2022.
While the chart above shows that owning shares has remained more common than owning cryptocurrencies (and that holding money has become more common as the year progresses), it still finds a steady increase in the percentage of investors holding certain cryptocurrencies. It rose from 36% to 39% over the course of the year, with eToro suggesting this was “led by a slightly older cohort of investors who seem to be looking to buy the decline.”
Yes, eToro’s report found that ownership among older segments of the public has increased more than it has with younger generations, who already have a well-documented openness to cryptocurrencies. Specifically, there was a 5% increase in cryptocurrency ownership among investors aged 35-44 and 45-54, rising to 53% and 36% respectively.
Perhaps even more significantly, eToro’s report found that cryptocurrency ownership among women increased quite sharply in 2022, becoming the second most widely held asset by women after cash. It went from 24% of female investors who held cryptocurrency in the first quarter of last year, to 34% in the last quarter. For the report’s authors, this indicates that crypto “is succeeding where traditional financial markets have sometimes failed to bring more women to the table.”
This should be taken as very encouraging news: despite claims from some sectors of the mainstream media and well-meaning critics that cryptocurrencies are suffering a slow death, it seems that the opposite is happening.
In fact, a survey of 5,000 American adults from the Federal Reserve Bank of Philadelphia was published in December 2022, finding that 24.6% of U.S. residents report that they or someone in their household owns cryptocurrency. This is a quarter of the population, signaling that cryptocurrencies are no longer a marginal phenomenon.
The Next Bull Market
And given that those figures were released during a recession, they also suggest that cryptocurrency ownership is now set to really take off during the next bull market. The latter will in fact arrive sooner or later (perhaps when Bitcoin will suffer another halving in 2024), and with it future surveys will discover that the ownership of virtual currencies has become truly mainstream.
But as the Crypto.com report makes clear, it could be Ethereum rather than Bitcoin that enjoys the lion’s share of earnings in the next bull run. As we have seen before, it successfully completed the transition to a proof-of-stake consensus mechanism in September 2022, a change that will provide the technological basis to make it not only less energy-intensive, but also more scalable and efficient.
Combined with the fact that it’s already the largest level one smart contract-enabled blockchain by some margin, the next bull market could see it grow massively. And if combined with the fact that recent upgrades (involving burning transaction fees) can make it deflationary during periods of peak usage, its price could really see some upward pressure.
However, judging by the research above, the next bull market will be beneficial for virtually all major cryptocurrencies of genuine value, and not just Ethereum. Of course, we just have to be a little more patient waiting for it to arrive.