On Monday, The Bank of International Settlements (BIS) published its “BIS Working Papers” a report which comprehensively studied and commented on Bitcoin.
The organization’s report suggested that the growing interest of investors towards Bitcoin is due to the rising prices over a time period and not because of their dislike towards banks or its perceived use as a store of value.
To publish the report, the organization extensively studied the relationship between Bitcoin prices, crypto trading, and the rate of retail adoption. It studied the key factors retail investors look up to for crypto adoption using trading applications downloads as a proxy to estimate the adoption and user investment at the time of download.
The report using the mentioned metrics concluded that the rise in Bitcoin prices is proportional to the increasing users i.e. debut of new investors. It also stated that most of the retail investors downloaded crypto applications when prices were surging.
Adding figures to the conclusion, the report stated that daily downloads of crypto exchange applications increased during July and November in 2021, the months when the price of Bitcoin peaked between $55,000 and $60,000 and reached its all-time high in November at $69,000. It also mentioned that about 40% of crypto application users are males under 35 and constitute the risk-seeking segment of the population.
Further, the report highlighted that the price of Bitcoin remains the most essential factor in light of global uncertainty or volatility, contrary to the popular opinion of Bitcoin as a safe haven. The BIS in its report assumed users to have invested in Bitcoin right at the time of application download and based on that projected that about 81% of users would be currently in a negative state if they made the purchase at a rate higher than $20,000.
The BIS’s report can also be connected to Glassnode’s report published on the same day which confirmed that only half of the Bitcoin addresses are in profit, reaching a two-year low.
Additionally, BIS in its report also added the analysis of blockchain data from a time when Bitcoin prices rose. The analysis showed that the smaller investors purchased whereas the larger holders (popularly known as whales) sold, thus making profits from the smaller investors’ expense.
The report also mentioned the geographical analysis which revealed that the crypto application downloads were highest in the regions namely Singapore, the United States, the United Kingdom, and Turkey whereas it was lowest in India and China. The main reason behind the low adoption rates was cited to be the stringent legal restrictions on crypto.