Here’s what’s driving Bitcoin (BTC) adoption, according to Bank for International Settlements Research
The Bank for International Settlements (BIS) says rising Bitcoin (BTC) prices are spurring much greater adoption just months later.
In a new bulletin from the BIS, the institution says that retail investors are pouring into Bitcoin after the price starts to rise, hoping to chase high returns.
“While the Bitcoin price and user numbers have moved in lock step, increases in user numbers have typically lagged increases in price by an average of about two months. The fact that adoption increases in the wake of price increases suggests that users are entering the system attracted by high prices and with the expectation that prices will continue to rise.
Indeed, this positive correlation remains robust when controlling for other potential drivers, such as general financial market conditions, uncertainty or country characteristics. In particular, the price of Bitcoin remains a much more important predictor of adoption compared to many other indicators, including stock market performance or volatility, changes in the price of gold or levels of global uncertainty.
The BIS says that while Bitcoin price increases appeared to be linked to more retail investors entering the crypto market, most of these investors likely lost money on their holdings because they failed to time the market swings.
“Around the world, bitcoin price increases have been linked to greater inflows from retail investors. However, most global investors are likely to have lost money on their crypto investments.
These losses could be compounded by the fact that larger, more sophisticated investors tended to sell their coins just before sharp price drops, while smaller investors continued to buy.”
Bitcoin is worth $24,409 at the time of writing.
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