Utility, not speculation, defined growth of cryptocurrency market in 2021

Caroline Bowler, Chief Executive Officer of BTC Markets

Australia’s crypto industry continues to evolve rapidly according to BTC Markets (BTCM) Investor Study Report 2021 launched. The report is a broad analysis of the data on the BTCM exchange for calendar year 2021, cut by demographics (age, gender, investor type) to anonymously explore cryptocurrency investment behaviours of its 325,000 clients.

What were the key insights from BTCM’s report?

According to the study, the largest inflow of BTCM’s new customers in 2021 came from Australia’s ‘mature wealth accumulators’ aged 45-to 59-year-olds with a 79% YoY increase. BTC Markets CEO Caroline Bowler finds this trend encouraging due to the measured risk appetite  of this age group as they start to plan for their retirement.

“They bring expertise in investment markets and their decision to invest in crypto is not driven by the fear of missing out (FOMO) but on strategic research and information.”

Average portfolio sizes continued to remain highest for the 60-plus year-old demographic due to  higher disposable income and comfort levels in leaving their crypto on the exchange.

The BTCM data showed the continued flattening of gender lines with the rise of the ‘Crypto Queens’. Female investors grew much faster than their male counterparts (126% vs. 83%).

Their average initial deposits were higher ($2218 vs $1978 for males), while average portfolio sizes inched closer to that of male investors ($6761 vs $7028). This is  despite female investors trading less frequently on a daily basis (2 times vs 3 times for males).

This behaviour reflects traditional female investment patterns in other asset classes, with women  typically taking longer, doing more research, and subsequently investing larger amounts. “As our platform shows, women have done their research and are now committing to investment – with a long-term, considered view,” Caroline Bowler added.

What were the crypto insights in 2021?

2021 saw a spike in the average value and volume of trades executed on the BTCM platform by 48% and 118% respectively, with the average daily orders increasing by 42%.

Bitcoin and Ethereum continued to be the most popular tokens, with Tether emerging as a new entrant in the top five traded cryptos. BTCM attributes this growth to more investors recognising the utility story behind cryptocurrencies. Given the decentralised nature of crypto, it is becoming a popular hedge against rising inflation and low savings rates.

“Many events in 2021 contributed to making it a watershed year for the cryptocurrency industry in Australia and globally. Around the world, people are using crypto as a means of payment and a fast, efficient way to remit money. As interest rates look set to rise, crypto’s use as a store of value is being demonstrated as a hedge against inflation,” Ms Bowler said.

“Closer to home, crypto is being taken seriously at the highest levels of the Gov’t with legislative reforms to foster the industry and improve investor protection. CBA‘s  entry into crypto via its banking app paves the way for other mainstream institutions to follow.”

“In summary, utility, not speculation is the lifeblood of the crypto ecosystem, and this narrative is  now well recognised at investor and government levels,” she added.

What were the investment patterns in 2021?

While market volatility continues to be the number one concern for cryptocurrency investors  according to our last report – reactions to this volatility varied across demographics.

BTCM’s report found that young investors (18–24years) continued to persist in the crypto  market with the highest average initial deposit growth in 2021 ($1150 vs $674, 70% YoY), which was more pronounced in the second half of the year ($1611 vs $882, 83% YoY). This was  despite the second half of 2021 characterised by a severe market correction.

“Younger investors have clearly not cracked under pressure, and instead embraced this  opportunity to buy the dip,” Ms Bowler said. The growth of average initial deposits came down, again more in the second half, indicating that older investors approached with caution.

What were SMSF and company insights from report?

While individual investors make up the majority of users on the BTCM platform, Sole traders (196%), Companies (79%) and SMSFs (74%), grew faster than Retail (66%) in 2021.

The size of the SMSF investment also saw a 15% increase with initial deposits now in the  hundreds of thousands compared to earlier investments in the tens of thousands, whereas  Companies saw an increase in the average portfolio sizes of 61%. “This commitment from SMSF investors illustrates a long-term bullish point of view,” Ms Bowler said.

BTCM has found an established pattern for new account openings that starts with individuals, then their partners, their SMSF and then their company, as they get more comfortable. “Institutions and superannuations are in a similar position to where the banks were, and market changes should give them the confidence to embrace crypto,” Ms Bowler concluded.