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Bank of International Settlements Ties Bitcoin Adoption and Crypto Investment Growth to Price Swings



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The Bank of International Settlements (BIS) recently explored the factors influencing adoption in the cryptocurrency space. In a newly released report, the bank explained that the period when retail users are most active on crypto exchange apps coincides with a rise in Bitcoin prices. The observation from the international monetary and financial organization conclusively negated any alternative suggestions for what drives crypto adoption – such as the dislike for banks.

Equating crypto app downloads to user adoption and investment in this asset class, the Working Paper issue explained that this user activity, which moves in sync with the volatility of cryptocurrency prices, affects young males significantly more than any other demographic. The report – based on findings from a study that evaluated the crypto trading app usage of retail investors across 95 countries between 2015 and this year- estimated that between 73% to 81% of retail traders have felt the pinch of the price drop in cryptocurrencies. According to their assessment, this risk-fond group (the most extreme being men under 35 years – 40% of crypto app users) leads to a consistent pattern of increased activity whenever the prices rise, and vice-versa.

The report highlighted the case of China’s crackdown on cryptocurrencies and the civil unrest in Kazakhstan as two periods that prove the case in that there was a notable decrease in crypto exchange app activity owing to the price changes experienced at the time. Specific figures showed that more than 75% of all users trading Bitcoin via apps downloaded them when the price of the coin was above $20,000.

Risk tolerance as a factor in crypto adoption

Economists from the bank, which serves as a central bank support system, also found that among US users, 20-year-old males are most willing to take on financial risk. This trend was lower for women of that and any other age bracket. For males, though, 40-year-olds were highly willing to engage in financially risky decisions. The BIS further highlighted that retail adoption is affected by regulatory restrictions, as seen with the number of total crypto trading app downloads per 100,000 people – a metric that ranks high in the US, Turkey, Singapore, and the UK but lowest in the likes of India and China.

To learn more about Bitcoin, visit our Investing in Bitcoin guide.

Binance CEO tells the cash-strapped to HODL; pushes for self-custody options for user assets

In a Monday AMA session hosted on a Twitter Space, Binance CEO Changpeng Zhao sharply cautioned that amid the capriciousness and instability of the current environment, novice crypto users rather just HODL. He similarly urged those short in cash to keep steady until the storm passes. CZ, who has received a lot of criticism for indirectly contributing to the recent events around FTX, added that crypto investment ought to be sought from the point of discretionary cash and a long-term view rather than cash needed for expenses in the near future.

Of course, the FTX questions came up, this time investigating the trust of crypto exchanges and their users. The CEO said Binance does not hold any debt or attempt to yield profits off user assets by loaning them to an external party. He also reiterated a stance of embracing user decentralization despite being the owner of a centralized entity. The crypto exec said Binance embraces decentralized protocols and even said the company could continue well in profit should its exchange business shut down for some reason.

Self-custody to help cut investor washouts?

Zhao has preached self-custody day since the start of the week, asserting in a Monday tweet that it is a fundamental human right toward safety in crypto. He advised that those who would rather store their crypto via self-custody wallets should do so but start with little amounts. They could proceed to larger investments once they are more comfortable with the tech. Former MicroStrategy CEO Michael Saylor shares the view. Most recently, the Bitcoin advocate noted that decentralization of power is necessary for crypto, bringing the essence of self-custody to the fore again. Specifically, its necessity to preserve the security & integrity of blockchain networks by creating a power of checks and balances.

Sam is a financial content specialist with a keen interest in the blockchain space. He has worked with several firms and media outlets in the Finance and Cybersecurity fields.