There are now around 241,700 people with Bitcoin and cryptocurrency holdings worth $1 million or more, which is up a considerable 40% from the past year, according to Henley & Partners and New World Wealth. As first reported by CNBC, there are 450 crypto centimillionaires, or those individuals with crypto and digital assets holdings of $100 million or more, and 36 crypto billionaires, the report revealed.
Although it is experiencing a strong correction right now, Bitcoin‘s price has more than doubled during the last year, as the US dollar declines and concerns grow over mounting deficits as well as fiscal spending.
More progressive regulation in the United States and greater adoption by investors and traditional financial firms has also boosted overall demand. Earlier this month, bitcoin price had surged to over $126,000+ for the first time before sharply correcting to around $107,000 at the time of writing.
The total crypto market cap has surged to over $4.3 trillion, adding a substantial $2 trillion in paper gains during the last three years. Although still quite small compared to the recent stock market boom– with Nvidia itself valued at over $4 trillion – the crypto surge has created wealth for millennials as well as other young investors who had been early investors in web3 and crypto.
The emerging class of crypto-rich is quite a recent development which means that thorough research on their spending habits and investing patterns is not widely available. However, an update by economists who examined crypto wallets reveals some key characteristics and insight into spending.
The research study, by Brigham Young University professors Darren Aiello, Mark Johnson and Jason Kotter, alongside Scott Baker at Northwestern University, Tetyana Balyuk at Emory University and Marco Di Maggio at Imperial College London, studies cryptocurrency investors based on transactions made to and from digital assets trading platforms.
It’s worth noting that this is not actually the best way to assess how wealthy or affluent crypto investors actually are, and the overall reliability and validity of this study is quite questionable.
Nevertheless, they revealed that crypto investors were spending around 9.7 cents for each dollar in added wealth.
This ratio, called the marginal propensity to spend, was reportedly over 2 times the level usually found for gains in the more traditional stock market or property values.
Because Bitcoin and crypto investors are younger on average, they also quite often spend more of their gains when compared with older generations.
The report found that the additional wealth accumulated by crypto gains accounted for about $145 billion in extra spending in this past year, or around 0.7% of overall US consumption.
But cryptocurrency price declines tend have the reverse effect.
The research report has also mentioned that the significant rise in crypto wealth over the past 10 years has “likely contributed positively to economic growth through consumption spillovers.”
However, the report also concluded that this symmetry indicates that major Bitcoin and crypto market crashes could exert “significant negative pressure on the economy as investors cut consumption expenditures.”