Uncertainty in legislation, concern of digital asset scams, and bad market conditions all contributed to a drop in Canadian cryptocurrency ownership in 2022.
Based on data from 4,996 Canadians, the Bitcoin Omnibus Survey (BTCOS) conducted by the Bank of Canada sheds insight on the state of digital currencies in the country.
The poll found that Bitcoin (BTC) ownership fell by 10% across a variety of holding categories from the previous year, with some variation due to market forces.
When compared to prior years, the reduction is striking. The BTCOS reveals that BTC ownership increased by 13% in 2021, a rise of 3% year over year.
While the decline was at its worst in August after the Terra network meltdown, adoption increased marginally as the year wound down as hope for the new year grew.
Participants reported that they did not diversify their cryptocurrency holdings beyond Bitcoin (BTC) and did not purchase other cryptocurrencies such as DeFI as a result of the decline in BTC ownership.
We see a drop in altcoin ownership, but no evidence that investors are fleeing Bitcoin for other cryptocurrencies.
The survey also indicates that prior influence from Elon Musk on the price of Dogecoin (DOGE) set it apart as the most popular altcoin.
As rumors spread that Musk was buying out Twitter, demand for DOGE skyrocketed in Canada. The expected DOGE integration on Twitter has also helped boost the cryptocurrency’s profile in Canada.
Ethereum (ETH), Litecoin (LTC), and Bitcoin Cash are three more altcoins that have seen significant growth in the past few months.
The drop was caused by market forces.
For the better part of 2022, miners, traders, and executives dealing with digital assets all endured a brutal winter.
Several assets lost more than half their value as a result of the price drop.
Bitcoin, the market leader, had its value drop by more than 55% in 2017, but the commodity has recovered some of those losses thanks to recent gains.
The Terra network breakdown in April, which wiped off almost $60 billion from the market, was just one of many memorable disasters that shook the cryptocurrency industry last year.
Due to the illicit practices of previous CEO Sam Bankman-Fried and sister company Alameda Research, investor confidence was already low when FTX imploded in November.
Financial regulators have been applying existing law ambiguously to digital assets, adding to the market’s problems as a result of the slow pace of legislation.
According to the study, most Canadians who purchase Bitcoin or other cryptocurrencies do so as an investment rather than as a form of payment.
In the report, Central Bank Digital Currencies (CBDC) were favored over private currencies for use in future monetary transactions.
If Canadians “almost completely” abandon cash, or “widely adopt and use private cryptocurrencies for payments,” then this prediction comes true.