Working Paper: NBER ID: w31856
Authors: Darren Aiello; Scott R. Baker; Tetyana Balyuk; Marco Di Maggio; Mark J. Johnson; Jason D. Kotter
Abstract: We provide a first look into the drivers of household cryptocurrency investing. Analyzing consumer transaction data for millions of U.S. households, we find that, except for high income early adopters, cryptocurrency investors resemble the general population. These investors span all income levels, with most dollars coming from high-income individuals, similar to equity investors. High past crypto returns and personal income shocks lead to increased cryptocurrency investments. Higher household-level inflation expectations also correlate with greater crypto investments, aligning with hedging motives. For most U.S. households, cryptocurrencies are treated like traditional assets.
Keywords: cryptocurrency; investing; financial constraints; risk attitudes
JEL Codes: E31; E42; G11; G23; G51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Higher past crypto returns (G12) | Increased cryptocurrency investments (G13) |
| Personal income shocks (G59) | Increased cryptocurrency investments (G13) |
| Higher household-level inflation expectations (D19) | Greater crypto investments (G13) |
| Liquidity shocks (E44) | Increased investments in cryptocurrencies (G11) |
| Temporary liquidity shocks (E44) | Increased investments in cryptocurrencies (G11) |
| Permanent liquidity shocks (E44) | Increased investments in cryptocurrencies (G11) |