Crypto Use Plummets in 2023: Fed Survey Reports Decline

• Crypto usage among investors is consistently falling according to Fed research.
• Other research showed a different pattern to digital asset usage.
• Survey research methods have limitations.

Crypto adoption is expected to rise as blockchain technology integrates deeper into our lives, promising better efficiency and security over legacy systems.

Yet the Fed’s Economic Well-Being of U.S. Households in the 2023 report highlighted a continuing decline in digital asset use among Americans, defying expectations that the number of crypto investors will continue rising.

Crypto Investors Retreat According to the Fed

The Fed’s Economic Well-Being of U.S. Households in the 2023 survey unveiled a notable downward trend in crypto usage among Americans. The survey data indicated that the percentage of adults holding or using cryptocurrencies fell to 7% in 2023, a significant decline from 10% in 2022 and 12% in 2021.

Crypto use among Americans per the Fed

Across all three years, respondents reported that buying or holding cryptocurrency as an investment was the most prevalent form of usage. However, this particular use case progressively declined between 2021 and 2023, potentially reflecting the broader market sentiment and price performance of digital assets during this period.

With Bitcoin bottoming at $15,600 in November 2022, signaling a low point for the industry as it grappled with the fallout from the FTX scandal , a fall in crypto investor’s sentiment and usage is expected, which was reflected in the decline in crypto use in 2022 compared to the previous year.

However, while 2023 witnessed a recovery in cryptocurrency prices, with a strong rebound in the fourth quarter, according to the Fed’s survey data, this upswing was not met with a corresponding increase in crypto usage. 

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Conflicting Reports on Usage Numbers

Crypto adoption among American investors is a murky topic considering that conflicting narratives exist. While the Fed’s report indicated a consistent year-over-year decline in usage between 2021 and 2023, other studies showed different results.

Security.org’s 2024 Cryptocurrency Adoption and Sentiment Report showed an increase in crypto ownership from 15% in 2021 to 33% in 2022. Although crypto ownership fell to 30% in 2023, the current year saw a jump in ownership to 40%.

Crypto ownership per Security.org

The report by Security.org was compiled from responses from 1,001 adult Americans, combined with data from 504 crypto-familiar respondents. Whereas the Fed’s report comprised a more substantial 11,400 respondents, who were also asked about broader financial matters beyond just cryptocurrency-related topics.

On the Flipside

• The Fed survey reported that 72% of adults were “doing at least okay financially” in 2023, down from 73% in 2022.
• Researchers criticize surveys on many fronts including reliance on the participant‘s memory and honesty, as well as survey questions being potentially leading.

Why This Matters

Relying solely on surveys to gauge trends like cryptocurrency adoption can be problematic, meaning this research method may fail to capture an accurate picture of the digital asset landscape.

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