CRYPTO STATE OF THE INDUSTRY REPORT

Cryptocurrency (aka crypto) is a digital asset that is secured by cryptography. Great for providing both security and safety, cryptography allows users to send payments all around the world while maintaining secure communication between the sender and intended recipient. Crypto requires encryption to verify transactions. This means coding is needed for both storing and transmitting cryptocurrency data between wallets and public ledgers. A major benefit of the currency is this can be done privately without the need for a central monetary authority such as the government or a bank.

So, how did crypto-currency actually come about? 

It was in 1998 that the term “cryptocurrency” was first coined by computer engineer Wei Dai. Later, Dai proposed B-money - a platform that would ensure crypto decentralization and removal of bank verification; however, B-money was never launched. Still, Dai’s ideas inspired Bitcoin founder Satoshi Nakamoto to launch his now iconic cryptocurrency in 2009, just after the economic crisis in 2008. Satoshi managed to solve a double-spending issue that had plagued previous iterations of blockchain cryptocurrencies, through bringing together numerous technologies and assembling them into Bitcoin - from this period on, Bitcoin boomed.  

But why the sudden interest in cryptocurrency now? 

Similar to the uptick in crypto activity during the economic crisis of 2008, Bitcoin went mainstream midway through 2020 thanks to the Covid 19 pandemic. During the pandemic, Bitcoin surged by 300% in 2020 amid speculation in the financial market that investors were hoarding the digital currency–due to a low-interest rate in the market.¹ It could also be argued that the surge in demand for BTC throughout the pandemic was also because the Fed increased the money supply substantially. With a combination of inflation, falling interest rates, and the ability to lend and move money becoming way less accessible mid-way through the pandemic, crypto was the perfect solution for many investors - in spite of its volatility.  

Currently, there are more than 2,000 cryptocurrencies worldwide, and nearly 36.5 million people in the U.S. own some form of cryptocurrency - a pretty impressive number.² 

This tastytrade study takes a deep dive into the current state of crypto within the United States and around the world. We have analyzed a variety of factors, including:  

• Demographic data of the crypto investor
• The countries and cities which are most invested in crypto
• Number of bitcoin ATMs in each country and U.S. state
• The most popular cryptocurrency by country
• Current crypto sentiment
• A breakdown of top cryptocurrencies by market cap
• The top performing historical cryptocurrencies

It’s essential for investors to have a clear picture of the industry in its current state. In comparison to other investment platforms, cryptocurrency is a relatively new offering, and it’s important to note that its market is still very volatile. Before investing in cryptocurrency, it’s vital to understand how it works, where it can be used, and how to exchange it.  

At present, even though North America may be the biggest trailblazer in terms of rapidly normalizing cryptocurrency, this adoption isn’t taking place everywhere at the same speed. Surprisingly, some smaller states are outpacing large metropolitan areas like New York. And worldwide, some unexpected countries are taking the lead in crypto adoption and popularity.  

We analyzed internal demographic data, as well as data from the top 10 sites dominating the crypto market, in order to take a deep dive into who exactly is investing in crypto now. Within this study, we looked into a wide range of factors, including age, location, and each demographic's favored cryptocurrency.

Next, let’s explore whether or not age affects the likelihood a person will invest in crypto?  

Data shows that a huge portion of the cryptocurrency playing field is composed of younger generations - with age demographics between 18-44 making up the largest share of crypto investors. Thanks to the digital world they grew up in, both the Gen Z and Millennial generations are a lot more tech and social media savvy when compared to the Silent Generation and Baby Boomers. This has in turn increased the visibility of digital investment and, subsequently, made it more appealing to younger generations.  

Data also highlights that millennials are the most likely age demographic to invest in cryptocurrency. 25-34-year-olds shared the largest percentage of investors across all analyzed crypto sites with a 34.9% share of the average total, followed by 35-44 year-olds with 21.4%. The Gen Z generation (18-24-year-olds) makes up 20.9% of the overall share. Studies also suggest that millennials are typically more advanced in their careers than Gen Z. As a result, Millennials have a greater amount of disposable income to be used for investments (which could suggest why their share of the crypto market is larger - at least for now).   

When compared to older generations, Millennials are typically less risk-averse regarding volatile investments. This risk-on appetite is due to Millennials' longer time horizon to retirement, which may allow them to recoup monetary losses. A study finds that individuals between $750 and $999 in disposable income each month are most likely to invest in crypto.³ Interestingly, those with a higher amount of disposable income are actually less likely to invest - given that those with higher disposable incomes also skew older and are more likely to be nearer to retirement age. 

Baby Boomers are the least likely age to invest in crypto across the board. The Baby Boomer generation is more risk averse - and untrusting of the new currencies (as crypto is a fairly recent addition). Thanks to a wide range of volatile characteristics, older generations are simply less likely to be bullish and trusting in the currency than perhaps younger generations.  

As with many other forms of investing, there is also a significant gender disparity within cryptocurrency. Males take up a whopping 71.6% of investors - leaving a small share (28.3%) to women. Even though the crypto culture was built with democratizing money in mind, a lot of women have stayed on the sidelines of the Bitcoin boom. With men investing in Bitcoin at more than twice the rate of women, it is evident that some women are untrusting of the industry's sharp price swings and often unregulated investment laws.  

As far as preferred coins, the most favored cryptocurrency amongst all generation groups was Ethereum (ETH) - with one exception: Gen Z (21 years and under) typically favored Bitcoin (BTC).  

From our pulled data, we also noticed both Baby Boomers and Gen X have Polkadot (DOT) listed in their top three favorite cryptocurrencies. Polkadot is a protocol that connects blockchains - allowing value and data to be sent across previously incompatible networks such as Ethereum and Bitcoin. It is both speedy and scalable.   

Across Baby Boomers, Gen X, Gen Z, and Gen Y age demographics, Shiba Inu (SHIB) ranked within the top five cryptocurrencies. Designed as an Ethereum-compatible alternative to Dogecoin, Shiba Inu is a token, not technically a coin. Tokens are created on top of existing blockchains - meaning Shiba Inu doesn’t have its own blockchain system. This means Shiba Inu can be decentralized and made widely accessible.  

Litecoin, aka LTC, ranked within the top five of all generations aside from traditionalists (those typically aged between 75-95). Litecoin shares features with Bitcoin but runs on a different algorithm. Litecoin’s goal is to become a medium for daily transactions and to offer a faster processing time than Bitcoin.  

The Average Net Income of the Crypto Investor 

The most likely average income of a crypto investor is 50k-100k, this wage demographic takes up a huge 32.4% of crypto investors. Next in line is a wage demographic of 100k-200k taking up 8% of trading customers. Interestingly, the least likely wage demographic is 1.2M+, with only 0.6% of trading customers. Those earning a small wage bracket between 0-25k still make up 7.86% of trading customers - which is a considerably larger number than those with the highest net worth.  

Cryptocurrency and Celebrities⁴: 

The cryptocurrency boom also caught the attention of some big celebrity names. The top celebrities investing in crypto are: 

• Elon Musk
• Jack Dorsey
• Mike Tyson
• Maisie Williams
• Mark Cuban
• Snoop Dog
• Steven Seagal
• Kanye West
• Floyd Mayweather. Jr

Out of the top ten celebrity Bitcoin investors, just one of them is female - Game of Thrones star Maisie Williams.⁴ 

So, where are most of the crypto investors located in the world? 

The U.S. alone is responsible for nearly 28% of crypto investors - that's nearly a third of the worldwide total. But why? Firstly, the United States is the third largest country in size and nearly the third largest in terms of population, with plenty of businesses accepting crypto investments. Since China banned Bitcoin in 2021, the U.S. has become the leader in Bitcoin mining. This is due in part to the country's wide range of access to renewable energy sources, low energy prices, and pro-cryptocurrency policies.  

The U.S. is followed by Slovenia, which takes up 8.7% of worldwide crypto investments. The Slovenian government has shown a huge interest in cryptocurrency - openly encouraging Bitcoin. In Slovenia, capital gains tax isn’t charged on money earned from crypto and cryptocurrency mining, as opposed to other countries which charge a large amount of tax for crypto capital gains.⁵ 

Known as one of the world leaders in economy, Germany is the third highest hub for crypto in the world, with 6.5% of worldwide investor share. Although the currency is not completely tax-free for all German residents, after a year of holding Bitcoin or another form of crypto, investors are not liable to taxation on those assets. This provides their citizens with a sustainable, long-term crypto investment strategy.  

Known as Elon Musk’s most favored cryptocurrency, Dogecoin is also one of the most favored cryptocurrencies globally. High in value because of a wide range of factors, including Musk's (in)famous tweets, Dogecoin’s space explorations, and even a repost by American Rapper, Snoop Dogg.  

During the pandemic, Dogecoin spiked after a viral meme-based TikTok challenge. Since then, it has been a key favorite, second only to Bitcoin in countries including India, the United States, Netherlands, Turkey, the United Kingdom, South Africa, and Canada, to name a few. Since its inception, Dogecoin has quickly amassed a diehard community of fans who found and developed new uses for the cryptocurrency. This includes a third-party online tipping service, which led to Dogecoin becoming a leading tipping coin on social media platform Reddit as well as crowdfunding charitable causes.  

Axie Infinity is a blockchain-based game in which players purchase NFTs. As a result, during Axie Infinity sessions, players can earn SLP tokens while they play and trade them for money at an exchange. An SLP (Smooth Love Potion) token is an ERC-20 gaming token that is popular in the game of Axie Infinity - it has an unlimited supply and is known to be the primary source of income within the game. The main component that attracts investors to this cryptocurrency is Axie Infinity's overall earning potential. Axie Infinity has proven popular in countries such as Indonesia, the Philippines, Vietnam, Thailand, Morocco, and Venezuela.  

XRP is a favored cryptocurrency in Japan. Tailored to work on the Ripple Network, which acts as a trusted agent between two parties in a transaction - XRPs network can quickly confirm that the transaction went through properly. Complete with a speedy transaction time and small transaction fee, XRP is one of the most favored cryptocurrencies worldwide.  

Launched in August 2020, Shiba Inu was created by an anonymous individual and is known as an alternative to Dogecoin. Through our pulled data, we discovered it is widely favored by countries such as El Salvador, Malta, Spain, and France.  

Ethereum, typically favored by Cameroon, is known as a decentralized global software that is, again, powered by blockchain technology. It is known to be scalable, programmable, secure, and decentralized - making it another popular choice around the world. It’s worth noting that Ethereum has undergone a major change in the way it operates - moving to a more eco-friendly and, by extension scalable, mining process that have made it a more attractive coin overall and could see significant pickup in regions that previously preferred other currencies.⁷

Flow, commonly favored by Argentinians, has been built for the next generation of apps, games, and digital assets.  

Phoenix is the U.S region where individuals are trading crypto the most - taking up a 3.41% share of all states. This is because Arizona is one of the few states that have enacted specific regulations for cryptocurrencies - making it easier for their residents to trade Bitcoin and other currencies.

Bowie sits at a firm second place with 2.67% of crypto trades in the U.S.

Meanwhile, Valley Springs in California is widely known as a popular place to buy Bitcoin and sits third place with 2.28% of crypto trades. 

Throughout our research we have looked into different cryptocurrencies and compared their overall approval within the market. Approval was based on the ‘bullish (positive) and bearish (negative) opinions of investors. Typically, if approval is over 50%, this means the overall sentiment and trust of investors are positive. ¹² 

At the time data was collected, Shiba Inu ranked the highest for approval across all of the measured cryptocurrencies at 98.62%. Interestingly, Bitcoin is ranked lowest for approval with 65.22% - this is, however, seen as a positive overall response from investors as the rating is still well over 50%.