The involvement of U.S. households in crypto assets saw a significant surge during the COVID-19 pandemic, coinciding with a notable rise in the overall personal savings rate. While only a small fraction of individuals held cryptocurrencies five years ago, recent data indicates that by mid-2022, nearly 15 percent of individuals had transferred funds into crypto-related accounts. This trend holds implications for household financial health, especially considering the inherent market volatility and evolving usage patterns of these digital assets.
This analysis draws on anonymized data from nearly 5 million active checking account customers, over 600,000 of whom have engaged in transfers to crypto platforms. By linking these transactional behaviors with demographic indicators, we gain insights into variations across income, gender, and racial groups.
Our findings help assess the differential impacts of rising crypto adoption and shed light on real-world financial trend-following behaviors. One key conclusion is that lower-income individuals generally fared worse—often buying later and at higher average prices—compared to their higher-income counterparts. Although the data capture inflows into crypto platforms rather than direct asset purchases, we estimate that the median investor likely experienced substantially negative returns in percentage terms. However, for most, the absolute dollar amounts involved remained relatively small.
How Crypto Engagement Evolved Over Time
The proportion of the population transferring funds into crypto-related accounts tripled during the pandemic, rising from a cumulative 3 percent before 2020 to 13 percent by June 2022. Adoption and transfer volumes occurred in concentrated bursts, closely aligned with sharp increases in Bitcoin prices. From 2015 to 2022, most new users made their first transactions during periods totaling less than five months, each coinciding with trailing monthly price surges exceeding 25 percent.
This herd-like behavior, driven by price momentum, mirrors patterns seen in traditional investments—though crypto transactions have been more concentrated. U.S. households have been net buyers of crypto assets in recent years, with a 2:1 ratio of inflows to outflows from 2017 to mid-2022. However, this balance shifted following Bitcoin's price declines in May and June 2022, as inflows dropped and outflows remained elevated.
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Demographic Profile of Crypto Asset Users
Previous survey-based studies have outlined the demographics of crypto users, and banking transaction data largely confirm these patterns. Overall, our findings align with Federal Reserve and Pew Research Center data regarding gender and racial composition.
Age and Gender Differences
Crypto usage is more prevalent among younger individuals: 20 percent of millennials, 11 percent of Generation X, and 4 percent of baby boomers engaged in crypto transfers. Men are consistently more active across all age groups, being twice as likely as women to transfer funds into or out of crypto accounts.
Men also demonstrate deeper involvement, with median gross transfers of approximately $1,000 compared to $400 for women.
Racial and Income Variations
Among millennials—who represent the largest group of crypto users—Asian individuals show the highest engagement rate at 27 percent, followed by Black and Hispanic individuals at 21 percent each, and White individuals at 20 percent.
Crypto involvement increases moderately with higher incomes across all racial groups. However, the income-based disparity is less pronounced for crypto than for traditional brokerage accounts.
Financial Risk Exposure in Crypto Investments
For most investors, crypto holdings remain relatively small. The median gross amount transferred into crypto accounts from 2015 through mid-2022 was approximately $620—equivalent to less than one week’s take-home pay for the median individual. However, nearly 15 percent of users transferred over one month’s worth of income into crypto accounts.
Higher-income individuals generally exhibit greater crypto engagement, both in absolute dollar terms and relative to income. This suggests that those with higher incomes were more willing and able to bear crypto-related risks.
When assessing potential financial distress, we find that 11 percent of individuals in the lowest income quartile and 15 percent in the highest quartile transferred over one month’s income into crypto. At higher exposure levels—such as three months’ income—these shares drop to 4 percent and 6 percent, respectively.
Notably, individuals with higher crypto exposure tend to have greater liquid balances and broader usage of investment brokerage accounts. This indicates that they may also possess a greater capacity to absorb market volatility.
Investment Timing and Estimated Returns
Given the extreme volatility of crypto assets, the timing of transactions significantly influences returns. We estimate purchase prices by linking transfer dates to Bitcoin’s daily closing prices, acknowledging that this approach may overstate losses if funds were allocated to less volatile cryptocurrencies or held as USD.
The median individual transferred funds when Bitcoin traded at a transaction-weighted average price of $43,900. However, lower-income individuals bought at higher average prices ($45,400) compared to higher-income individuals ($42,400). Non-college graduates also paid a modest premium—2 to 4 percent higher than college and graduate degree holders.
With Bitcoin trading near $20,000 in late 2022, these implied purchase prices suggest widespread investment losses. Less than 20 percent of users transferred money when Bitcoin was below $20,000, while over half did so when prices exceeded $40,000.
Frequently Asked Questions
How many U.S. households are investing in crypto assets?
As of mid-2022, nearly 15 percent of individuals had transferred funds into crypto accounts, a significant increase from pre-2020 levels. This surge was especially notable during the COVID-19 pandemic.
Which demographic groups are most active in crypto?
Crypto engagement is highest among millennials, men, and Asian individuals. Higher-income groups also show deeper involvement, though the differences across income levels are less extreme than with traditional investments.
What financial risks do crypto investors face?
Most investors have limited exposure, with median transfers equivalent to less than one week’s income. However, about 15 percent of users transferred over one month’s income into crypto, making them more vulnerable to market downturns.
Did lower-income investors fare worse in crypto markets?
Yes, lower-income individuals tended to buy at higher average prices and later in market cycles, likely resulting in poorer investment returns compared to higher-income groups.
How does crypto investment behavior compare to traditional investing?
Crypto inflows are more concentrated around price spikes, indicating stronger herd behavior. However, like traditional investors, crypto users are more likely to invest during bullish markets.
Are crypto losses affecting household financial health?
For most, the absolute amounts are small, limiting broader financial impacts. However, those with significant exposure may face heightened risk if crypto markets decline further.
Conclusion
Crypto asset usage has grown rapidly among U.S. households, though most investments remain modest in size. While overall exposure is limited, a minority of users have transferred substantial portions of their income into crypto, leaving them vulnerable to market downturns.
Investment timing has been heavily influenced by price trends, with many buyers entering during market peaks. Lower-income and less-educated individuals often bought at higher prices, likely exacerbating losses. These patterns suggest that crypto assets may require tailored policy approaches to effectively protect investors and maintain economic stability.