Crypto traders vary little from general investing public says NBER study

Think about the typical cryptocurrency investor. What comes to mind? Maybe someone young, tech-forward and college educated, with lots of disposable income. While this may have held true before, recent data indicates there is little separating today’s cryptocurrency investor from holders of any other asset. 

A study published by the National Bureau of Economic Research found that, with the exception of certain high-income early adopters, cryptocurrency investors resemble the general population. Holders can be found across income levels in proportions roughly similar to those with traditional assets; while there are always more of the latter, it’s generally not by much. 

There is a similar pattern in demographics, with cryptocurrency investors being not that different from the general population as a whole. For example, Asians make up 7% of the total sample of investors and 7.4% of cryptocurrency investors. Further, the median age in the sample overall was 38.4, while the median age for cryptocurrency investors was 37.9, a difference of about 26 weeks. Gender is fairly even too, with men making up 49.3% of the overall sample and 49.4% of cryptocurrency investors. There were also little to no differences in educational level: while those with a college or graduate level education were slightly more likely to hold cryptocurrency, and those with a high school education slightly less, the variances are measured in fractions of a percent. 

Not that cryptocurrency investors have no difference at all from the general population. One factor that seemed to make a difference was whether or not someone gambles. The paper found that while gamblers make up 28.7% of the overall population, they make up 38.8% of cryptocurrency investors. This lines up with previous research from at least more than one source, which found associations between cryptocurrency trading and problem gambling, as well as other mental health issues such as depression or anxiety. This phenomenon has also been observed anecdotally throughout the cryptocurrency world. 

Further, cryptocurrency investors tend to have slightly higher incomes (though not dramatically so), and have slightly more financial stability. Further, they are more likely to think of themselves as sophisticated investors (the paper defined “sophisticated” as “those who receive paycheck income from the top 200 finance firms” which the researchers conceded was an imperfect measure). 

Researchers also found that those who are more exposed to inflation are also more likely to invest in cryptocurrencies. 

Still, with the exception of gamblers, these seem to be more circumstantial than demographic differences. The results are a marked contrast to another study in 2021. Using data from a cryptocurrency trading platform, the study found that men made up 79% of users and those under 30 made up 64%, implying that much has changed in the cryptocurrency landscape in just a short period of time. 

“Our results suggest that crypto investors are not as dissimilar from equity investors as some might believe,” said the paper’s conclusion. “Importantly for policy makers, the excitement of the last several years around this
new asset class did not seem to come at the expenses of investments in more traditional assets.”