According To BIS Study, Bitcoin Popularity Is Driving

The Bank for International Settlements (BIS) says that when the price of Bitcoin (BTC) goes up, it leads to a lot more people using it within a few months.

In a new bulletin, BIS says that when the price of Bitcoin starts to go up, small investors pour money into it to try to get high returns.

“While the Bitcoin price and user numbers have moved in lockstep, upticks in user numbers usually lagged rises in the price by an average of about two months. The fact that adoption rises in the wake of price increases suggests that users enter the system attracted by high prices and with the expectation that prices continue to go up.

Indeed, this positive correlation remains robust when controlling for other potential drivers, such as overall financial market conditions, uncertainty or country characteristics. In particular, the price of Bitcoin remains a much more important predictor of adoption compared with many other indicators, including stock market performance or volatility, changes in the price of gold or the levels of global uncertainty.”

BIS says that even though the rise in the price of Bitcoin seemed to be caused by more retail investors entering the crypto market, most of these investors probably lost money on their investments because they didn’t know when to buy or sell.

“Around the world, bitcoin price increases have been tied to greater entry by retail investors. However, most global investors have probably lost money on their crypto investments.

These losses could be exacerbated by the fact that larger, more sophisticated investors tended to sell their coins right before steep price declines, while smaller investors were still buying.”

At the time of writing, one Bitcoin is worth $24,409.