Bitcoin plunged on April 26, falling more than 5% over the course of the day to just below $38,000.
Which means that as of 5pm EST, according to IntoTheBlock, only 46% of all bitcoin holders were in the black with 12% breaking even. Compare that to the start of the business day, when bitcoin was around $40,300 and 63% of bitcoin investors were in the black, and you’ll see why investing in cryptocurrencies can be a tricky business.
Look at Ethereum, the #2 cryptocurrency, and you’ll see 63% in the black and 6% on par, down from 73% this morning. Now think of a merchant accepting bitcoin online or on the ledger, and you see the headwinds crypto faces as a payment currency.
These numbers are pretty solid: IntoTheBlock scans all bitcoins in every wallet address – everything is publicly available on the blockchain, but no names – looks at the price paid for each bitcoin, averages the price of all bitcoins in this wallet coin, and provides a number for each bitcoin owner.
But IntoTheBlock said the numbers over time show that much of bitcoin’s price volatility is driven by short-term holders — traders, rather than investors.
This is worth considering in light of the recently published US Crypto Consumers study by PYMNTS, which found that during at least part of the previous 12 months, 23% of all consumers bought crypto, or a total of 59.6 million.
That’s about 18 million new crypto owners, in a time frame where bitcoin’s price has risen from over $60,000 to $29,000, climbing back to nearly $70,000 and now below $40,000.
Usage is growing
At the same time, there is more than a little evidence that consumers who own crypto use it to buy things.
This month, “The US Crypto Consumer: Cryptocurrency Use in Online and In-Store Purchases,” a survey by PYMNTS and BitPay, found that 28% of consumers consider crypto as a payment option. This figure gets significantly higher if you exclude baby boomers and seniors – almost 39% – and without Gen X it rises to 42%.
Anecdotally, holders of Visa-brand crypto debit cards, which allow consumers to spend crypto at any payment network vendor, spent $1 billion in mid-2021, CNBC reported — and spent $2.5 billion in the final three months of this year.
“To us, this indicates that consumers see the value of having a Visa card associated with an account on a crypto platform,” said Vasant Prabhu, Visa’s Chief Financial Officer. “It helps to access that money, fund purchases and manage expenses, and do it instantly and seamlessly.”
This is getting easier as crypto payment processors like BitPay expand their options. PYMNTS CEO Stephen Pair told Karen Webster that crypto owners tend to spend when prices are high and hold when they are low, dollar-pegged stablecoins that are bought when bitcoin and other cryptocurrencies are high and used as a hedge.
“Instead of buying bitcoin natively, when the price is high, they will convert to stablecoins,” Pair said.
Read more: Bitcoin’s Future as a Payment Instrument is Bright, Says BitPay CEO
“I think in 2022 you will see a lot more people – that next wave of people – showing an interest in crypto, both from an investment perspective and from a ‘let’s try it for a payout’ [perspective],” he added. “There will be a lot more places with this service — where you can spend crypto and do it in person, perhaps making people feel more comfortable trying it out than maybe when it runs out. a website where they aren’t sure if they’re doing it right or wrong.
Also see: BitPay CEO: Bitcoin Payments Will Explode in 2022 as Crypto Hits the Inflection Point
Other payment processors see a growing market. Payment company Bitcoin Strike this month announced agreements that enable bitcoin payments on Shopify, with prepaid payment provider Blackhawk Network, and on NCR point-of-sale terminals.
Related: Firmly integrate Bitcoin into payments, Strike Partners with NCR, Shopify, Blackhawk
And in March, Stripe CEO John Collison announced that the payment processor was once again supporting crypto payments.
Read more: Stripe Returns to Crypto Payment Processing