Last month, the Company Sharespost released an industry report titled “Cryptocurrency and Blockchain Survey: Consumers Bullish, Investors Cautiously Optimistic” that highlighted findings from their recent survey on trends in the industry. Sharespost is a Company that looks to engage private companies and investors to provide insight, liquidity, and advice in regulated private transactions not normally seen in public markets. Since most companies in the fintech space are small start-ups, the Company deploys time and resources to connect these niche segments of the capital markets together. Given the attention blockchain technology and cryptocurrencies have gotten over the last two years, they have the industry in their views to provide their services.
This is their second survey published and the sample size of the responses grew from 2,352 to over 3,000. While most responses were from consumers, around 20% were from individual accredited investors and institutions. The first survey was in January 2018 which is why I found the results interesting to review given the declines seen in asset prices since the last survey. They stated in their report:
”Despite the 60 percent decline in cryptocurrency valuations this years, consumers and investors continue to offer a bullish, long term outlook for crypto and Blockchain.”
However, in some of the variances from January results, you can clearly see that expectations have been tamed. For example, most people surveyed now believe that the year 2025 is more realistic in terms of mass adoption of cryptocurrencies versus the prior thought of it being in 2020. “Nevertheless, 59 percent of investors and 72 percent of consumers plan to increase their holdings over the next 12 months.” I find this interesting considering the continued depressed prices we see. It makes me wonder how much supply continues to be available in the market after these declines.
As the market has declined, the amount of people saying it will decrease did reduce as well as the amount thinking prices will remain the same. I guess those have seen the declines and expect a rebound given the continued news that demonstrated the potential of the technology and new asset class. They also signaled that a growing number of companies are implementing Blockchain technology. They believe that mostly of the disruption and potential will be in the financial services sector given the respondents backgrounds in asset management, payment processing, and money transfer sectors.
The following are a couple of additional highlights from the survey:
- Bitcoin, Ether and XRP continue to be the most popular crypto holdings.
- Bitcoin saw a significant increase in investor interest.
- “Volatility and security are key concerns for Crypto ownership while lack of education and commercial use pose key challenges to Blockchain adoption.”
- Coinbase continues to be the most popular exchange
In reviewing the methodology implemented for the survey, I found a couple of key aspects that I found interesting that may be important to consider in being objective. First, 70% of the consumers who responded earn less than $100k a year. This is an important point as from a United States perspective, it demonstrate a fairly adequate representation of the retail investors. However, it probably does not really represent those that are more likely to be involved in cryptocurrencies as we have seen statistics that state millennials leading in that category. Next, 59% of consumers that responded are from North America while 27% are from Asia. This also does not represent the amount of geographical adoption in cryptocurrencies as we know that Asia is where most of the trading volumes exist today. Therefore, I would takes these key factors into consideration as it is mostly focused from a North American market perspective.
Another interesting result is how awareness amongst the surveyed group has risen since January. Over 95% say they are not aware of cryptocurrencies. This is not surprising given the attention the sector has gotten in the mainstream media. Given the attention, new asset management boutiques have been created and have given rise to a new asset class. It seems as this has helped in increase the knowledge of these assets for now. However, even more intriguing is the fact that the group is generally reducing its exposure to the asset class as shown below.
So, despite the positive outlook remaining for the asset class, respondents are not considering added exposure; whether as a hobby or investment. However, the speculative investment metric remained which is a small positive note given that is probably a good assessment of the type of investment category it is currently. It is apparent that the bear market has impacted sentiment which is clear in price moves we have experienced.
While surveys will never provide insights to immediate valuations, it provides perspectives on potential moves given sentiment and momentum which have clearly influenced asset prices. As this is clearly a new asset class that is an inefficient market given its decentralized structure, we should continue to see volatility as price and value are perceived differently but will impact valuations. Most assets in the space do not have traditional valuation metrics like cash flows so price is purely driven by supply and demand which are influence by many factors.
How do you think this survey portrays the view of blockchain technology and cryptocurrencies? What implications do they have for future prices? I look forward to hearing your thoughts and feedback in the comments below!
Charts are Screenshots from Sharespost Report
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