A recent study by the Bank of Canada (BoC) has shown a decline in the ownership of cryptocurrencies over the two years. The BoC has attributed this decline in crypto ownership to ecosystem collapses, regulatory hurdles, and price depreciation.
Bitcoin’s Decline Most Notable
According to the Bitcoin Omnibus Survey, Bitcoin’s ownership across the country dipped to 10% at the end of last year. This decline has been attributed to various factors, including the significant drop from its all-time high due to the current market conditions, especially since Bitcoin’s price crashed over 50% from its all-time high of $69,044.77 last year.
The survey also cited FTX’s unexpected collapse as contributing to the decline, as it prompted enhanced scrutiny from regulators while also creating doubts in the hearts of crypto investors.
The decline in Bitcoin ownership wasn’t a result of investors moving their money to other crypto assets given that altcoins also suffered a similar fate to Bitcoin, as ownership in these digital assets also experienced a downward trend last year.
The report read:
Investors did not appear to shift out of Bitcoin and into other cryptoassets, as we observe decreased ownership of altcoins.
There are some positives for Bitcoin and the crypto ecosystem, as Bitcoin’s ownership is still higher than the 8% recorded between 2018 and 2020. Another silver lining is that many locals are aware of Bitcoin (meaning they could invest in it in the near future), as general awareness of the token has been at an impressive 90%.
However, despite being aware of the term Bitcoin, many Canadians still don’t understand how the cryptocurrency operates. According to the BoC’s research methodology, 61% of non-bitcoin owners showed low crypto literacy. Meanwhile, a meager 30% of Bitcoin owners exhibited high-level crypto literacy.
Market remains highly volatile | Source: Crypto Total Market Cap on Tradingview.com
Financial Literacy Doesn’t Equate To Crypto Enthusiasm
Many would have predicted that persons with higher financial literacy would be more bullish on Bitcoin and other crypto assets. However, that isn’t the case in Canada, according to the survey. Interestingly, respondents with a high financial literacy were the ones who were quick to exit the crypto market. In contrast, those with a lower financial literacy remained bullish despite the market conditions and regulatory concerns.
While these figures may not be so encouraging, there is enough reason to believe that the growing adoption of cryptocurrencies worldwide will impact the future of crypto ownership in the country as more locals gain crypto literacy.
Furthermore, efforts from the authorities to provide regulatory clarity could also help as it will boost investors’ confidence in the country and consequently increase crypto ownership in the country.
Featured image from iStock, chart from Tradingview.com