After a triumphant year in 2021 as far as wider crypto adoption goes, the markets took a turn for the worse in 2022, leaving many wondering if this has taken a toll on the number of people owning and using cryptocurrencies.

In response to recent statistics published by Insider Intelligence, we examine the effect that the current crypto bear market has had on the previously soaring adoption rates. Insider Intelligence’s statistics were gathered by analyzing quantitative and qualitative data collected from government agencies, research firms, public companies, and media firms as well as interviews with top executives in the industry.

By more deeply exploring crypto ownership rates and crypto payments transaction volume, we seek to better understand whether the ongoing market slump is causing global adoption rates to grow or decline.

Crypto Ownership

In 2021, the ease by which consumers could buy cryptocurrencies increased dramatically thanks to traditional payment options incorporating cryptocurrencies into their legacy services (e.g. PayPal). This led to roughly 10% of the US population reporting to own at least one cryptocurrency. It is estimated that by the end of 2022, this number will increase to 12.8% of the population or a total of 33.7 million people.

This year in the US, roughly 25.2 million people hold Bitcoin, representing a 16.7% increase from 2021. Likewise,  some 13.1 million Americans or 39% of total crypto investors hold Ethereum, the second biggest cryptocurrency, which is 26.8% more holders than figures reported last year.

Below is a graph obtained from Statista which illustrates the countries which use cryptocurrencies the most. Nigeria with the highest level of crypto adoption, unsurprising from a nation that recently launched its own CBDC (central bank digital currency).

Ownership by Age Group

The 25-34 age demographic is the largest ownership group, closely followed by those aged 35 to 44. Interestingly, the 65 and over age group is the fastest-growing segment, albeit currently the smallest. One reason cited as spurring this uptick in elderly crypto holders is the decision made by traditional investment firms like Fidelity to incorporate  Bitcoin into their retirement plans.

Crypto Payments

This year, the transaction value of crypto payments is estimated to increase to $10.4 billion, marking a 70% increase from 2021. It is estimated that by the end of 2023, this value will rise to $16 billion.

People using crypto for purchases currently sits at 10.7% of crypto owners or 3.6 million adults, illustrating a 68.6% year-over-year increase.

To this end, the principal analyst at Insider Intelligence, David Morris, commented: “Last year was all about networks building crypto payments infrastructure. We expect that more crypto options will be layered into how people pay, like cards and digital wallets. These factors should spur high crypto payment growth rates over the next few years.”

It is believed that in 2023, the number of people using cryptocurrency for payments will increase into the double-digit range.

Companies Invested In Bitcoin

The end of 2020 brought about a wave of institutional investment, with large companies investing millions (in some cases, billions) into the largest cryptocurrency. Below is a look at the companies with the largest BTC holdings.

Global Regulation Update

In a round-up of what has been happening on the regulation front, there were several reports released this week that explore various aspects of the industry and the necessary policies that can be put into place.

The Committee on Payments and Market Infrastructures (CPMI) of the Bank for International Settlements (BIS) released a report providing a framework to “help payment system operators and authorities understand and evaluate the benefits, challenges, and risks of interlinking arrangements” with regard to cross-border payments.

Also concerning cross-border payments, the Financial Stability Board (FSB) published a report exploring how to improve the adoption of the Legal Entity Identifier (LEI) with regard to processing KYC.

The International Organization of Securities Commissions (IOSCO) Fintech Task Force (FTF) published the Crypto-Asset Roadmap 2022-23. Looking at the crypto markets as well as the broader fintech-related trends and innovation in the space, the report prioritizes ​​policy-focused work.

The Financial Stability Institute of the Bank for International Settlements (BIS) also published a piece titled ‘Big tech interdependencies – a policy blind spot‘, which explores the regulatory implications of how financial services are provided by big tech firms and the interdependencies prevalent in big tech business models.

Markets vs Usage

While the markets might be in a slump, the trajectory of crypto ownership and payment usage is continuing to increase. Though this typically bodes well for asset prices, however, this might take a while to be realized.

As more businesses incorporate cryptocurrencies into their payment options, the industry as a whole is solidifying its foundation within the global financial sector. Whether buying crypto to hold or to use for payments, the world is waking up to the convenience of digital currencies and the notion that cryptocurrencies are here to stay.

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