Bitcoin’s surge has added nearly 70,000 people to the list of crypto millionaires in just one year, according to CNBC, citing recent wealth tracking studies, adding hundreds of billions of dollars to the global economy.
The number of wealthy individuals with digital assets worth more than $1 million is estimated at 241,700, a 40% increase over last year, according to data from Henley & Partners and New World Wealth.
The list also includes 450 individuals with more than $100 million in cryptocurrencies and 36 digital billionaires.
Bitcoin prices have more than doubled in the space of a year, driven by a weaker dollar, growing fiscal deficit concerns, an improving regulatory environment in the United States, and the growing adoption of cryptocurrencies by traditional financial institutions.
The world’s most popular cryptocurrency hit a record high of $140,000 before falling back to around $110,000.
The total market capitalization of cryptocurrencies reached over $4.3 trillion, a $2 trillion increase in just three years before the crashes.
While these figures still lag behind the gains of the stock market—Nvidia alone is valued at over $4 trillion—the digital boom has created massive wealth, particularly among millennials and younger investors who entered the market early.
From investment to a new lifestyle
Z22 Technologies founder Philipp Baumann said that Bitcoin is no longer just a speculative tool, but rather a “fundamental currency for building wealth in a parallel financial system.”
Despite the relative youth of this wealthy class, a new study conducted by a team of economists has revealed some aspects of their consumer behavior.
The study, which included researchers from prestigious universities such as Brigham Young, Northwestern, Emory, and Imperial College, relied on an analysis of digital wallet movements and their transfers to exchanges.
Spending outpaces stock and real estate markets
The study showed that crypto investors spend about 9.7 cents for every dollar they earn in profits, more than double what investors in stocks or real estate spend.
This is because most digital investors are younger, who tend to spend more than older investors.
Researchers estimate that this additional spending resulting from crypto gains will reach approximately $145 billion in 2024, equivalent to 0.7% of total US consumption.
But the picture isn’t always rosy. Just as ups and downs lead to spending, downs and downturns can reduce consumption, which can put negative pressure on the economy.
Despite the stereotype of digital billionaires spending on luxury cars and watches, the study indicates that most of their spending goes to restaurants, entertainment, and general merchandise.
In a previous study, researchers found that real estate is very popular among these wealthy individuals, with home prices rising 0.46% faster in areas with a high population of digital investors when Bitcoin prices rise.
No selling on the horizon: more buying
Despite the huge gains, the digital rich don’t seem to be in a hurry to sell their assets.
“Now is the moment they’ve been waiting for, and they want to be fully invested,” said Tad Smith, former CEO of Sotheby’s and partner at 50T Funds.
He adds that “whales”—large investors in Bitcoin—may sell a small portion of their holdings, but the majority are pumping more money into the market.
As they age, these investors tend to spend more on real estate than on luxuries, especially as they start families.
But the obstacle they face is the difficulty of obtaining mortgage financing using crypto as collateral.
Zac Prince, head of GalaxyOne, a Galaxy Digital platform, said, “Many investors have millions of dollars in crypto, but they can’t get a mortgage from traditional banks.”
However, things are beginning to change. Federal Home Mortgage Finance Agency Administrator Bill Pulte has directed Fannie Mae and Freddie Mac to consider cryptocurrencies as part of their mortgage lending criteria.
Prince asserts that allowing borrowing against cryptocurrencies will spark a spending boom, as investors will not have to sell their assets to obtain liquidity.
