Individual Cryptocurrency Investors: Evidence from a Population Survey

Cryptocurrencies, such as Bitcoin, are a highly volatile asset class where very high returns are offset by large losses. This study examines the financial success of individual investments in cryptocurrencies and analyzes whether it relates to similar explanatory factors as for investments in other asset classes. For this purpose, a nationally representative survey data set of 3,864 German citizens is used, of which 354 (9.2%) reported owning cryptocurrencies in March 2019. We analyze the subpopulation of 225 cryptocurrency owners who classify as investors. 56% of them experienced positive returns, while 29% had negative results. The remaining respondents broke even. The average investment was (sic)1,773 in a portfolio of two cryptocurrencies. At the time of the survey, the average portfolio value had risen to (sic)7094 - an average gain of 300%. While nearly half of the investors (44%) outperformed Bitcoin market returns, not a single one of the early investors (2009-2012) did. We find that net income, the degree of cryptocurrency knowledge and the degree of ideological motivation for owning cryptocurrency have positive effects on returns. This first scientific analysis of individual investment in cryptocurrencies provides a basis for future research and for regulatory decision-making.