While it is no surprise that recent market shenanigans have caused investors to shed their cryptocurrency holdings, some are leaving the asset class more than others.
This is among the findings of recent research conducted by the Financial Health Network.
Vice President of Policy and Research Angela Fontes said the Financial Health Network was motivated by the desire to understand volatility following the collapse of FTX better. While much data was generated before the meltdown, little has been produced.
Black cryptocurrency ownership rates sinking
Current overall cryptocurrency ownership is down by roughly one-third compared to last summer. Back then, it was estimated to be between 16 and 17%. Now it is around 11%.
Ownership rates have plummeted with Black investors, Fontes said. Whereas it was as high as 20-plus% at its peak, it is now down to eight.
That is an unfortunate chapter to what was shaping into an encouraging story. Cryptocurrencies were touted as a positive investment vehicle for the Black community. It does not require brokerage accounts or investment advisors. The new asset class appealed to people with an understandable mistrust of financial institutions.
Black ownership rates are now similar to Caucasian rates. They are also lower than Asian (24%) and Latino (11%) percentages. Possible reasons for the higher Asian and Latino rates are cultural familiarity with cryptocurrencies and currency volatility in some Latin American countries. Cryptocurrency serves as a hedge.
Cryptocurrency’s remittance abilities are a strength
Fontes also sees folks holding onto crypto because it is much easier to send across borders than other options. People who send international remittances are more likely to have cryptocurrency at 14% compared to 10% for those who do not send money overseas.
“We do see some indication that for consumers who need to send or spend money across borders easily, cryptocurrency may be a desirable alternative to traditional products,” Fontes said.
“Our data certainly are not conclusive, but it suggests at least that one of the reasons folks may be holding on to cryptocurrencies or continuing to invest in this way is the ability for cryptocurrencies to transcend national borders in a way that traditional stock ownership might not.”
Cryptocurrencies seem to be settling into a more logical spot in investors’ minds. The vast majority of current crypto owners also have other investments. It is part of more diversified strategies and less of a swing for the fences.
Supporting this is the finding that 43% of cryptocurrency owners are deemed financially healthy compared to non-owners.
Those with more money are more likely to be experienced investors in several asset classes. More than 20% of households with annual incomes north of $150,000 hold cryptocurrencies.
Only five percent of those with incomes below $30,000 own any.
Close to 90% of crypto owners have a retirement account, well ahead of the non-ownership rate of 63%. Three times as many cryptocurrency owners have taxable investment accounts compared to non-owners.
Cryptocurrency owners are more likely to be male and were, on average, 10 years younger than consumers without cryptocurrency holdings (41 years old versus 51).