JPMorgan Chase publishes research on the use of cryptography

The American multinational investment bank and financial services holding company JPMorgan Chase has published the results of a research project in which it was engaged. The report highlights how trends emerged in the demographics they sampled, reflecting a shift in preferences among US crypto users.

The report, titled “The Dynamics and Demographics of U.S. Household Crypto-Asset Usewas co-authored by the company’s president, Chris Wheat, and George Eckerd, the company’s head of capital markets research. According to the authors, their methodology went through “anonymized data covering a sample of nearly 5 million active checking account customers, more than 600,000 of them have made transfers to crypto accounts.”

The research details how most US-based or registered crypto users increasingly transacted for the first time during the peak of the crypto-asset price spikes. The report also highlights how the use of crypto is skewed in favor of “men, Asian people, and younger people with higher incomes.”

The report also found that each portfolio’s holdings tend to be “relatively small” given that median flows are equal to less than a week’s worth of income. However, this is counterbalanced by the results which show that around 15% of users have net transfers higher than the average monthly income per individual. This shows how cryptocurrencies have become increasingly popular among US households, but their usage has been relatively low compared to other investment options such as stocks and bonds.

Despite this relative lack of exposure, a small subset of crypto users may be at financial risk if the crypto market declines further. About 15% of crypto users have transferred more than a month’s net salary to crypto accounts, which makes them more vulnerable to future price drops, compared to non-crypto investors; this percentage increases as the price of cryptocurrencies drops.

The trend also shows how most of these holders transferred crypto when prices “were significantly higher than recent levels,” while the lower-income demographic often made purchases at higher levels, compared to holders. who had access to more income.

When the price of a security rises rapidly, households typically respond by moving money into that asset. The JPMorganChase researchers therefore concluded that this implies that tThe “timing” of these transfers is characteristic of “herd behavior”. To add, the researchers note that US households tended to make large investments in cryptocurrencies. during the period when their value increased sharply.

Using data on the timing of transfers to cryptocurrency accounts as a proxy for investment price, JPMorgan Chase research found that lower-income households tended to purchase cryptoassets at significantly higher prices. higher than other groups. According to the financial firm, this would also mean that at the rates cryptocurrencies were trading at the end of 2022, the majority of US households would have lost money overall if they had owned a cryptocurrency for more than a few months.

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