Crypto: Explosive growth despite numerous challenges

In 2024, the adoption of cryptocurrencies remains a subject of great interest, influencing financial markets and sparking debates on regulation. As financial giants integrate blockchain solutions, countries are exploring the creation of official digital currencies. However, persistent challenges such as price volatility and security concerns hinder widespread adoption. At the same time, communities and businesses are exploring new applications of crypto, from decentralized finance to asset tokenization. The future of cryptocurrency adoption continues to be dynamically influenced by technological, regulatory, and social factors. In this article, let’s take a look back at the state of crypto adoption despite the tumultuous context of this industry.

Still Strong Interest in Crypto!

Since 2023, the enthusiasm for cryptos has seen phenomenal growth. Analyses show that awareness of the relevance of these assets is such that a large majority of people are familiar with cryptos. According to some analysts, cryptocurrency ownership has increased substantially by 10 percentage points in 2023. In the United States, for example, it went from 30 % to 40 % in just one year. Estimates suggest that no less than 93 million Americans now own one or more cryptos.

Figures show that of this total, the holders of cryptos are predominantly men. However, there has been a significant increase in the number of women. A change potentially stimulated by prominent female figures in the fields of blockchain and investment such as Laura Shin and Cathie Wood of Ark Invest.

But in terms of age, most groups have similar rates of ownership. With the exception of people 60 years and older, who are distinctly less inclined to own cryptos. Nevertheless, this generalized awareness regarding cryptos hides a certain skepticism. That of a substantial part of crypto-enthusiasts who believe that the recent approval of a Bitcoin spot ETF will not have the expected effect on the adoption of cryptocurrencies in 2024. And the so far mixed results of this financial option seem to prove them right. Although it must be recognized that a number of those who do not yet own crypto could venture into this territory, provided there is greater regulatory oversight.

Crypto Adoption Still Driven by the Same Reasons

If crypto adoption is progressing, it’s due to the practical utility of these assets. Indeed, cryptos have become a favored means of diversifying portfolios, mainly due to their decoupling from traditional stock markets.

It should be noted that in 2023, the correlation between bitcoin (BTC) and stocks reached its most negative point since the period before the pandemic. This change has arguably solidified the role of cryptos as an effective means of diversifying asset portfolios.

In fact, for more than a third of crypto owners, the interest in these lies in the financial gains they provide. Even though some of these users seem motivated, or even fascinated by the underlying technology of cryptos, the reasons for adopting them haven’t really changed. Thus, over 50 % of cryptocurrency holders were looking to improve the profitability of their portfolios with these assets. A goal that 45 % of these asset holders achieved, with 30 % of them incurring losses.

This shows that cryptos are not really a shortcut to rapid wealth accumulation. The timing of crypto investments plays a crucial role in the profitability of crypto. While cryptos can be rewarding in terms of capital gains, this is not possible without a certain amount of patience and a consistent strategy.

Towards a Sustained Increase in the Number of Crypto Adopters in 2024?

The United States is not the only country to witness a remarkable increase in crypto holders. A recent report from the firm Crypto.com shows that this is a global trend. Thus, the world crypto community has experienced a substantial increase in the number of its crypto owners. Between January and December 2023, their total climbed by 34 %, reaching the staggering figure of 580 million individuals.

This growth has been maintained, despite various challenges, including the fight against inflation by Western central banks, geopolitical conflicts in Europe and the Middle East, and the lasting effects of the pandemic.

In detail, the Crypto.com study indicates a continuation of this momentum in the first half of 2023, thanks to the successful Ethereum upgrade to Shapella. The second half of the year was marked by strong growth of bitcoin (BTC). A trend fueled mainly by the filing of Bitcoin Spot ETF applications and increasing speculation on the American crypto market.

In this vein, the total number of BTC owners increased by 33 %, from 222 million in January to 296 million in December. This represents 51 % of the total number of crypto owners. Simultaneously, Ether (ETH) ownership experienced a 39 % increase. It went from 89 million in January to 124 million in December, accounting for 21 % of global crypto ownership. Knowing that the annual adoption momentum of cryptocurrencies hasn’t decreased, we might consider a similar situation throughout this year. Still, the recent downturn in the crypto market, with the decline of all leading cryptos, should not last too long. It is not excluded that the adoption of cryptocurrencies might take a hit in case of a persistent bear market.

Conclusion

Despite ongoing challenges such as price volatility and security concerns, crypto enthusiasm has seen remarkable growth. This is marked by a substantial increase in the number of holders, reaching 580 million individuals by the end of 2023. This is clearly a sign that cryptocurrencies continue to be valued for their practical utility and the effective diversification of portfolios they offer. However, uncertainties remain, particularly in the face of regulation and recent market volatility. This does not preclude the possibility that crypto adoption will strengthen throughout this year as the market evolves positively.