Bitcoin Buyers Are Bailing, but Crypto Rewards Haven’t Lost Appeal

There’s been a narrative in the crypto press this week that despite the crashing price of bitcoin and signs that large and institutional investors are bailing out, there are still new small investors coming into the market or increasing their investments, as the number of digital wallets with a 0.1 to one bitcoin balance jumped 200,000 in the past five weeks.

But that ignores the fact that the price of bitcoin dumped by a third in that time, decreasing the investment needed to reach that tier from $3,000 to $2,000 — suggesting that people who are investing are doing so in smaller amounts. And seeing as there are signs that larger bitcoin holders are selling off, that it’s a factor of larger wallets shrinking.

Which backs up other signs of decreased interest from smaller investors — at least in the short term — such as crypto and stock exchange Robinhood’s tumbling active user count, which dropped 7% to 14.6 million last month — and is down 40% year over year.

That said, the number of crypto investors jumped steeply in the year ending in April, according to PYMNTS “U.S. Crypto Consumer” report — despite crypto’s prices falling about 50% beginning in November.

The number of U.S. consumers who bought or held crypto in that period reached 23%, or nearly 60 million. That was up from 16%, or about 41.5 million, in the 2021 survey.

See more: The Data Point: 23% of US Consumers Owned Cryptocurrency in 2021

Painless Accumulation

Where crypto, especially bitcoin, is seeing growth is in so-called passive investments, such as round-up and crypto-back rewards on credit and debit card spending that are a way for people to channel what they consider “free” money into bitcoin in nickel-and-dime amounts that build over time.

While the individual additions are small, the amounts can add up: PYMNTS recent survey, “New Reality Check: The Paycheck-To-Paycheck Report: The High Earners Edition,” found that the average U.S. consumer earning $100,00 to $250,000 “spends $2,900 per month across two credit cards.”

See also: The Data Point: Paycheck-to-Paycheck Reality Is Reality for Over 6 in 10 Americans

If one of those offers crypto-back rewards, that’s $174 per year in bitcoin added to a wallet.

The 1% to 2% crypto-back spending rewards programs offered by crypto-spend debit cards issued by exchanges like Coinbase that are expanding into the general credit card market, MoneyLion Co-founder and CEO Diwakar Choubey told PYMNTS CEO Karen Webster recently.

Dipping a Toe

“Crypto roundups are a perfect way for first-time users to start learning about the volatility,” he said, adding that people interested in bitcoin and crypto investments, but scared of its volatility, can become comfortable with it a few bucks at a time.

“Once you get a hang of it, then you can put [crypto] on daily auto invest,” he said. “You can auto invest in your managed portfolio and a percentage can be auto invested into crypto asset. The two of them working together creates a system that’s contextualized and personalized for each household that works really well because then you’re not having all of your eggs in one basket.”

That’s going to become more common, audit and consulting giant Deloitte believes.

On Tuesday (June 21), it announced a partnership with New York Digital Investment Group (NYDIG) that will focus on helping “companies of all sizes implement digital asset capabilities in their businesses,” notably bitcoin products such as banking, consumer loyalty and rewards programs, and employee benefits, among others, it said in a release.

Visa, Mastercard and recently American Express have gotten behind crypto rewards, and more mainstream merchants are looking into it as well.

Read more: Abra to Offer Crypto Rewards on Amex Network Card

In March, Shake Shack tested a bitcoin rewards loyalty program for clients who pay with Block’s Cash App.

In November, “sleep fitness company” Eight Sleep found “very high engagement, great adoption,” with a promotion in which it partnered with crypto payments processor BitPay to offer a $150 crypto reward with select products.

“It was beyond what we were expecting — and we’re definitely going to bring back offers such as the crypto rebates,” said Alexandra Zatarain, Eight Sleep co-founder and vice president at the time.

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