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Keep HODLing On: Crypto Holders Stayed Despite Bank and Crypto Collapses

According to a Morning Consult survey, regulation, use cases, and wallets are top of mind for crypto investors this year.  Nonetheless, despite a harsh crypto winter and the failures of Silvergate, SVB, and Signature Bank, investors have mainly remained HODL. 

“As of March 17, 2023, 10% of consumers said they had moved all of their money somewhere else as a direct result of bank collapses,” according to the research. Despite the fact that those polled “were disproportionately high earners, they were much more likely to own cryptocurrency than the general population, and the majority were millennials.”

According to Nicki Zink, industry analyst team head at Morning Consult, “39% of millennials said they owned cryptocurrency, 19 percentage points higher than the general population.”

While Gen Z ownership was “on par with the general population” at 21%, Zink stated that 20% of all consumers reported holding cryptocurrency.

According to the research, adults who “own cryptocurrency — and specifically bitcoin — have remained consistent throughout 2022 and 2023.” Since January 2022, the data has only fluctuated by a few percentage points, with 20% of respondents polled claiming they still owned cryptocurrencies in March. In comparison, 15% owned bitcoin. 

BlockFi, Voyager, Celsius, FTX, and Three Arrows Capital all went bankrupt in 2022, as did TerraUSD, which wiped out billions of dollars in investor funds.  The recent volatility in cryptocurrency may have changed how investors view cryptocurrency. So far, 24% of those polled in the research said they want more regulation in the space, up from 17% last year. 

While it is unclear what type of regulation the respondents desired, “We see more consumers saying crypto should be even more regulated than these more financial assets,” Zink said. In particular, the proportion of adults who believe cryptocurrency should be more regulated has risen by 6 percentage points since March.”

Some have accused the SEC of “regulation via enforcement,” claiming that many large crypto firms, such as Coinbase, are unsure about regulatory standards. According to The Telegraph, Coinbase CEO Brian Armstrong stated earlier this week that “anything is on the table, including relocating,” because the regulatory environment in the United States is so cloudy. 

Last month, the SEC served Coinbase with a Wells notice, which is an alert issued to corporations ahead to enforcement action for securities violations. The SEC also charged Bittrex with listing coins that it considers securities on its platform. Bittrex has stated its desire to exit the United States prior to the indictments.

All of these worries may be influencing how investors approach their own wallets. 

“More cryptocurrency owners are turning to cold storage,” Zink said in an interview with Blockworks.  Nearly 40% of cryptocurrency owners reported having a cold wallet, a 58% increase from January 2022.

“While it’s clear that owners were not swayed away from crypto itself,” she added, “how they store it appears to be shifting, even with major downfalls of crypto companies and fluctuating bitcoin value.”

 

Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Crypto is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Crypto market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.