Only the smartest (and most foolish) investors own Bitcoin: the Bank of Canada

A new report from the Bank of Canada has uncovered some intriguing facts about the state of Bitcoin ownership across the country.

The report found that roughly 13% of Canadians owned Bitcoin in 2021 – but that investors with average financial literacy are the least likely to buy in.

When and why are Canadians buying BTC?

Like the central bank’s survey knewBitcoin ownership figures in 2021 were more than double the 5% ownership present from 2018 to 2020. The increase was largely driven by the wider availability of products for buying Bitcoin, along with massive increases in Canadian savings during the pandemic.

Meanwhile, about 90% of Canadians are now aware of Bitcoin’s existence. This broad awareness mimics Grayscale’s survey results last year, which found that 99% of American investors know about Bitcoin.

However, knowledge of Bitcoin beyond the term itself was less common. 40% of survey respondents who owned Bitcoin (and 66% who did not own it) showed a relatively low level of knowledge when confirming core statements such as “Bitcoin is backed by a government” (which is false). This figure was higher than in previous years, where the proportion was typically below 30%.

The timing of when investors bought Bitcoin also had some bearing on their motivation to do so. After 2019, buyers were more likely to be interested in Bitcoin as “new technology, while long-term holders were more attracted to it due to a lack of trust from the government or as a payment method.

That said, it was overwhelmingly likely that both parties would see Bitcoin as an investment vehicle. Naturally, long-term owners benefited more strongly from the Bitcoin price rally in 2021 than recent owners.

Perhaps unsurprisingly, most Bitcoin holders were not whales. The median Bitcoin holder had $500 CDN worth of the asset, while 70% held less than $5,000 CDN worth.

Are Bitcoin Investors Smart?

Financial literacy turned out to be a strong predictor of whether someone bought Bitcoin – but not as expected.

By 2021, Canadians with low financial literacy had a 15.6% chance of owning Bitcoin, according to full report. However, a similar figure was found among highly knowledgeable investors, at 14.7%. The discrepancy was fundamental to average literate investors, only 8.8% of whom owned Bitcoin.

In previous years, investors with low literacy were the most common holders. The figures for low, medium and high literacy levels in 2020 were 8.4%, 5.3% and 5.3% respectively.