Demographics of crypto investors
The importance of demographics
Demographics refer to statistics that describe populations and their characteristics. A demographic analysis is used to study a population based on factors such as age and gender as well as socioeconomic data expressed statistically including education, income, employment, marriage rates and more.
Demographic information aids in providing a basis for understanding communities; it is mostly used by governments, corporations, and non-governmental organisations to learn about a particular population’s main features for several purposes such as market research and policy development.
By analysing and tracking a certain community, we can see where they have been, where they are now, and where they are heading. Apart from providing us with a glimpse at the ‘before and after’, it is used to shed light on particular features or unique qualities of a specific community.
Telling the story of the crypto community
Crypto is becoming more popular as access to the crypto market is getting more convenient. The cryptocurrency market is still not a mature one, but a greater number of persons consider cryptocurrency an economic and financial instrument used for trading and investing.
If you wonder which countries have the most crypto activity, we suggest reading this article: 'Which countries use crypto the most?'.
A clear understanding of demographics provides valuable insight into potential strategies and policies. When we analyse and interpret demographic information, we can tell the story of the examined community.
Crypto assets are on a long journey of being recognised as speculative assets and alternative investments to being used on a broad scale by divergent types of users worldwide. To understand how crypto could be widely adopted, we need to find out where we are now.
Demographics of crypto investors
With the expansion of the crypto industry, many people decided to start investing in crypto assets. Over the years, several research attempts have revealed the demographic data of cryptocurrency investors. Let's take a look at which groups of people are most likely to become crypto owners.
The crypto exposure timing
First, we want to find out when people first used cryptocurrency. A 2023 study by the Pew Research Center asked people in the United States this question and found that roughly three-quarters of Americans who have ever invested in, traded, or used cryptocurrency said they did it for the first time five years ago. Only 10% of respondents said that they did it more than five years ago, and 16% of them did it for the first time in 2022.
Additionally, the Pew Research Center stated that about three in ten users from lower-income households reported first investing in cryptocurrency back in 2022, compared with about one in ten adults from middle or upper-income households.
A survey conducted by JP Morgan Chase found that the share of the population that has ever transferred funds into a crypto-related account tripled during the COVID-19 pandemic. The research in question also stated that the adoption of crypto accounts and the trading volumes have come in concentrated periods that coincided with sharp increases in Bitcoin’s prices.
What attracted users to crypto assets for the first time?
A 2024 study by Campino and Yang found that the most common reason to get involved with cryptocurrency for the first time was to make a profit by trading. The second most chosen answer was the decentralised concept of cryptocurrency followed by the revolutionary technology answer and finally, because of the influence of the Internet.
As for the sample characteristics of this study, the respondents are males residing in the U.S., between the age of 18-45, who received university education and make more than 3000 USD per month.
The research in question wanted to find out which factors lead people to adopt cryptocurrencies after the first contact as well. Most users stated that they adopted cryptocurrencies due to coin appreciation, anonymity, avoidance of intermediaries, high security, and low cost.
Why some people don't want to use crypto?
The mentioned 2024 study by Campino and Yang examined a second group of people who have never used crypto, with similar sample characteristics as the first group.
The research found that, although this group of respondents never used cryptocurrency, they had a good level of knowledge regarding the crypto space as well as where to obtain them. However, the vast majority of respondents didn’t quite understand how crypto transactions work.
The main reasons the second group of respondents didn’t want to adopt cryptocurrencies were fear of the high volatility of the crypto market, non-reversible transactions, potential scams and frauds as well as a lack of knowledge.
Similarly, the Motley Fool Ascent's 2024 Cryptocurrency Investor Trends Survey showed that the most cited reasons why respondents who don’t own crypto haven’t invested are security reasons, a lack of knowledge on how to buy crypto, and not knowing what to do with crypto investments.
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Age range, gender, and ethnicity
How old are crypto investors?
The JP Morgan Chase study, which states that its results on the age, gender, and ethnicity characteristics are consistent with data from the Federal Reserve’s Survey of Household Economic Decision Making and separate studies from the Pew Research Center, demonstrated that crypto usage is more prominent among younger generations.
If you are a frequent reader, you probably remember that we discussed the connection between Gen Z and brands within the Metaverse in this article: 'How the Metaverse is helping Gen Z connect with their favourite brands'.
The Piplsay study showed that 49% of millennials and 13% of Gen Z own or hold crypto. A study conducted by Stilt found that 76.5% of millennials and 17.4% of the Gen Z generation own crypto. These studies show that between 62% and 94% of respondents, either millennials or Gen Z, own crypto assets.
The 2021 Morning Consult study found that most crypto owners are millennials at 57%, followed by Gen X at 20%, Gen Z at 13%, and Baby Boomers at 10%.
Cryptocurrency investors by gender
The JP Morgan Chase study found that males are more involved in crypto than females. A report by Morning Consult showed that 70% of cryptocurrency owners are men, but they represent only 48% of the general population, while 30% of women are crypto investors and owners even though they comprise 52% of the general population.
A 2021 Bank for International Settlements working paper found that the impact of features such as gender and age on crypto investments could be driven by preferences rather than differences in knowledge about the technology.
For example, concerning gender, the knowledge gap has increased over time while the ownership gap emerged suggesting that preferences matter. The percentage of male and female crypto owners was similar from 2014 to 2017, but the gap emerged in 2018.
The World Economic Forum stated that gender disparity in the crypto world began with its inception, influenced by the underrepresentation of women in technology and finance. However, the 2022 Business Insider report found that in the fourth quarter of 2022, women increased their ownership of digital assets by 5 percentage points.
Ethnicity data of crypto investors
To isolate differences in race, the JP Morgan Chase study focused on millennials and found that Asian users had the highest involvement rate at 27%, followed by Black and Hispanic individuals at 21%, and white users who came in at 20%.
The 2021 Morning Consult report stated that white U.S.-based respondents come in at 62% of the total crypto ownership while comprising 69% of the U.S. adult population. Secondly, 24% of U.S.-based users are Hispanic, followed by African-American users at 8% and Asian-American users at 6%.
Education and income
Gemini’s 2022 Global State of Crypto report showed that a vast majority of crypto investors are eager to embrace new technology such as blockchain technology and invest in innovations right after their launch. Interestingly, the study found that 62.5% of people who own a hybrid or electric car hold or have held crypto assets compared to 6.9% of people who don’t want to invest in crypto.
The impact of education on crypto investment decisions
The JP Morgan Chase study found that a majority of crypto investors hold a college degree. However, most research on the profile, socio-economic aspects, and attitudes of investors remains highly concentrated in developed countries.
For example, a 2021 research study by Fujiki stated that the average Japanese crypto owner is young and male and has a higher level of financial literacy. Similarly, a 2021 study by Panos, Karkkainen, and Atkinson and a 2022 research study by Ciaian, Cupak, Fessler, and Kancs find that young males who are more educated are more likely to engage in the cryptocurrency market.
There is a growing need for education and awareness about cryptocurrencies and blockchain technology in all parts of the world. Learn Crypto recognised the immense potential Africa holds and sponsored seminars across African colleges and universities. You can read more about it in this article: 'Empowering Youth in Africa through Crypto Education'.
What about income data?
If you are already a crypto user, you probably know the ‘don’t risk what you can’t afford to lose’ mantra of crypto investing. Users with higher incomes are more likely to invest in crypto.
This has been confirmed by the JP Morgan Chase study; the level of crypto engagement, measured by the U.S. dollar value of transfers and scaled by income, is typically higher for higher-income individuals.
The 2023 Voice of the Investor study divided the term crypto investor into two sub-categories – casual and committed crypto investors. Casual investors are those with 1-9% of investable assets in cryptocurrency while committed investors have more than 10% of investable crypto assets.
This study found that there are significant differences between these sub-categories; the casual crypto investor has a much higher average household income and a more diversified portfolio with assets spread throughout individual stocks, cryptocurrency, mutual funds, and retirement accounts in comparison with the committed crypto investor.
The psychology of crypto investors
The 2023 Voice of the Investor study, based on statistics, provided several main psychological features of crypto investors.
For starters, crypto investors are excited; when respondents with some amount of investable assets were asked why they started investing, 46% of them answered that they found investing exciting.
Secondly, crypto investors are considered engaged and eager to learn from individuals. A typical crypto investor tends to check investments more than those who don’t have crypto investments, and are more likely to pay attention to fellow investors and social media news.
This type of behaviour suggests that cryptocurrency investors are more active and don’t employ the ‘set it and forget it’ investing activity which makes sense due to the volatility of the crypto market.
The key to understanding the crypto audience
A landscape once dominated by tech-savvy early adopters now attracts a wider audience. From the presented data, it can be concluded that the younger generations are more open to technological innovations and crypto investments.
This aligns with the psychographics of the studied population, describing these individuals as excited risk-takers eager to learn. Understanding these traits is important for the wider crypto adoption.
The correlation between demographics and the cryptocurrency adoption index
Researchers use demographics data in different countries to obtain a more comprehensive perception of the broader aspects related to the adoption of new technologies as well as the possibility to anticipate the effects of demographic change.
How can demographics help businesses?
For example, understanding demographic data associated with higher adoption of cryptocurrencies can help in predicting which countries are more likely to adopt them and which may face obstacles on this path. This information can be useful to regulators, businesses and potential crypto investors.
Furthermore, understanding demographic data associated with crypto adoption can help businesses understand the most important needs and behaviour of crypto users, and therefore, develop related products and services.
The impact of demographic data on financial inclusion
Demographics can help us understand the barriers to cryptocurrency adoption. As mentioned above in the text, users typically answered that they decided not to invest because of high market volatility, security issues, and because they didn’t have enough knowledge or didn’t understand how a cryptocurrency transaction works.
Similarly, researchers can identify demographic groups that struggle with access to traditional financial services and develop solutions to enhance financial inclusion and provide these groups of people with a better access to alternative financial services.