Rising prices drawns Bitcoin buyers, a Bank for International Settlements study found

A study by Switzerland-based BIS found that speculative motive are one of the primary reasons for retail investors.

Rising Bitcoin prices are what drive crypto adoption, a study from Bank for International Settlements reveals.

“Cryptocurrencies are volatile assets that have gone through multiple boom-bust cycles. To date, people do not use cryptocurrencies widely to make payments, to measure value or to finance real-world investments. Yet despite this, retail investors continue entering into crypto exchanges to trade cryptocurrencies like Bitcoin," the authors said.

In the study, Switzerland-based BIS examined the drivers of crypto trading app adoption on the daily use of crypto exchange apps for 95 countries over 2015–22, trying to understand what drives retail adoption of Bitcoin despite volatility in cryptos.

The research show that, when the price of Bitcoin rises, more people download and actively use crypto exchange apps. About 40% of these are young men under 35 - commonly identified as the most "risk-seeking" segment of the population - who tend to have a higher risk tolerance than women and older users.

In particular, the study focused on two events that affected Bitcoin's price without directly impacting crypto exchange app usage: the crackdown of Chinese authorities on crypto mining in mid-2021 and the social unrest in Kazakhstan in early 2022. The reserchers found that, during both events, a change in the price triggered a significant change in the number of users.

Finally, the research finds that investors view cryptocurrencies as a speculative investment rather than a means of payment for real economic transactions, revealing that due to price declines, an estimated 73-81% of retail investors have likely lost money on their initial investment.