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The report from the Fed shows that cryptocurrencies are gaining popularity as an investment tool

The Federal Reserve (FED) has issued its annual report that reflects the financial lives of Americans and it indicates that Americans are more likely to use cryptocurrencies as an investment tool than as a mechanism payment.

The U.S. Household Economy Report 2021 is based on the Fed Board’s 9th Annual Survey of Household Economics and Decision Making, released in October and November 2021. For the first time, the next report contains data on cryptocurrency usage.

In 2021, up to 12% of Americans surveyed hold or use cryptocurrency, according to the report. Data shows that cryptocurrency is preferred as an investment tool over a payment transaction, with only 2% using it to make purchases and 1% to send money to friends or family.

The above numbers conclude that lower-income adults are more likely to use cryptocurrencies for transactional purposes rather than lucrative investments. 13% of people use crypto for payments perhaps because they don’t have a traditional bank account and 27% don’t have a credit card. Nearly 6 out of 10 people who trade crypto have an income of less than $50,000 and only 24% have an income of more than $100,000.

In contrast, those who hold crypto for investment purposes often have “disproportionately high income and almost always have a relationship with a traditional bank and have other retirement savings.” Indeed, 46% had income of $100,000 or more and 29% had income of less than $50,000. Nearly all, 99% already have a bank account.

The study was conducted before the Omicron variant spiked in 2021. The Fed recognizes that this and other changes to the economic landscape could affect the results of the study if the study takes place after that.