Bitcoin, ether ownership fell in 2022, Bank of Canada finds. Here’s why.
Bank of Canada says that the financial markets and ‘tight regulatory environment’ possibly added to Canadians exiting crypto
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In a 2022 survey released on Wednesday, the Bank of Canada broke down the ownership of cryptocurrencies in Canada.
The report found that Canadians sold out of their bitcoin positions in 2022, but did not ”shift out of Bitcoin and into other cryptoassets, as we observed decreased ownership of altcoins.”
Possibly adding to that statistic is the fact that the Bank of Canada found that under a third of bitcoin owners “are highly literate about how the Bitcoin system actually works, while a slightly larger proportion have basically no knowledge.”
But altcoin ownership remained roughly the same in 2022 as it was in 2021. Only about a percent of Canadians surveyed owned a stablecoin.
Meanwhile, “…the ownership rate for ether, the second most popular cryptoasset, declined from 7% in 2021 to 4% in 2022,” the Bank wrote.
Read more: Canadians appear willing to embrace CBDC: Survey
The Bank of Canada found that, in 2021, bitcoin holders cashed out for profit while “the decline in Bitcoin ownership from 13% to 10% contrasts with stable ownership rates observed from 2017 to 2018 (5%) when prices declined even more than between 2021 and 2022.”
Last year, the price of bitcoin was volatile as crypto winter settled in and the collapses of TerraUSD and FTX sent shockwaves throughout crypto.
The Bank of Canada believes that the decline in bitcoin ownership in 2022 “shouldn’t be surprising” because 2021 saw many Canadians invest “record” amounts in traditional financial assets as well as cryptos — such as bitcoin, which helped to “explain the increase in the ownership rate to 13% in 2021.
Jumping into investments isn’t the only reason that Canadians were interested in bitcoin, however. The Bank noted that 24% of bitcoin owners in 2022 “cited technology-related reasons, such as an interest in new technologies, for holding the cryptoasset.” Only 11% said that they held bitcoin for payment reasons.
“With the exception of 2021, the percentage of owners citing payment-related reasons for owning bitcoin has steadily declined from its peak in 2016,” the Bank said.
The Bank stated that the volatility not only in crypto markets, but also in financial markets, helped to “reduce investors’ appetites for risky assets, including cryptocurrencies.”
The tight regulatory environment was also noted, between the Canadian Securities Administration forcing cryptocurrency platforms to “comply with investor protection laws” and the US SEC regulating through enforcement helped to lessen the appetite.
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