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Ask the Expert: What can consumer research tell us about new pathways to crypto?

Kim Kardash

At Bakkt®, we look to incorporate breaking research into our product strategies. We sat down with Kim Kardash, our former VP of Consumer and Market Insights, to discuss recent learnings on the crypto industry. All the data referenced below comes from Bakkt’s Wave 1 Crypto Tracker.

In October of 2022, Bakkt fielded Wave 1 of our bi-annual crypto tracker study. This project represents an exciting milestone in our quest to track shifts in attitudes, awareness and usage around crypto. The result is a thorough examination of the factors driving crypto adoption, the barriers still present, and promising pathways for forward-thinking brands and institutions to enter the fold.  

Importantly, the tracker studied Crypto Owners, as well as people who were interested in purchasing crypto, but hadn’t yet taken the plunge—referred to as Crypto Curious. Comparisons between these two groups allow for an interesting added layer of analysis regarding consumer profiles and barriers to adoption. 

Impact of recent market events  

Consumer sentiment pre- and post-FTX was one focus of the tracker. We fielded Wave 1 at the end of October 2022, and as soon as we came out of the field, FTX events began to unfold. One of the big learnings from that time period is that the change in consumer sentiment pre- and post-FTX depends on where someone is in their crypto journey. For the Crypto Curious audience, there was no significant change pre- and post-FTX when it came to likelihood of purchasing in the future. On the contrary, demand stayed relatively steady. This is likely explained by the fact that this group doesn’t have a personal stake in crypto now, and doesn’t keep up with current crypto events; therefore, they are likely to have less unaided recall of the events.  

For those who do own crypto, we did see a slight dip in their likelihood to purchase in the future, but only by about 7%. Crypto Owners, of course, have higher unaided recall of recent market events and can describe in more detail what happened. But overall, we can confidently say that consumers have shrugged off market volatility and the FTX collapse. There are no signals of immediate exit from the market.  

The future of finance 

Another focus of the tracker was gauging how consumers conceptualize crypto and its significance to them. Most research participants agreed with the statement that crypto is the future of money (68%). Respondents seemed to acknowledge that everything in our lives evolves. Why wouldn’t money? Many said that this is the financial development of our lifetime. It’s the next logical step in the progression of currency. The second reason why consumers agree that crypto is the future of money is that they’re already seeing businesses and brands they know embracing crypto as a way to pay. That’s a signal to them that they may need crypto in the future for digital purchases, since brands they already interact with are advertising these capabilities. 

And finally, consumers are able to articulate that crypto can solve real problems: Faster and cheaper transfer of funds, more secured transactions, privacy, and prevention of counterfeiting. Despite the volatility and the collapse of large players in the market, there is still this belief in crypto and we expect that to keep playing out with the intent to purchase data and ownership data.  

Financial institutions positioned to enter the space 

Another encouraging finding is that banks seem incredibly well positioned to deliver on a crypto value proposition. One of the big reasons for that is trust; we found that the Crypto Curious trust their bank 30% more than the typical crypto trading app for purchasing crypto, and that’s huge. When we dig a little deeper and ask consumers why they trust their banks so much more, we hear things like, “I trust the bank with my regular income so I would trust them with crypto as well”, or things like “my bank just can’t disappear.” The brick-and-mortar still brings a very good sense of trust to the experience. There’s a face-to-face interaction. Probably one of my favorites is, “my bank has never let me down.”  

We also completed another recent study1 in December 2022 to understand how a banking and crypto value prop lives together and how a crypto offering might drive new assets for a bank. One insight in particular that I think is an incredibly positive implication for banks is that 75% of Crypto Owners said that they would be open to moving their crypto from an exchange to the bank if their bank had this offering. Crypto Owners are open to trying new ways of acquiring crypto.  

Importance of Gen Z 

Finally, our research also shows that the reason for purchasing crypto does vary by life stage. In terms of using crypto as a long- term investment, sentiment is strongest with those 55 plus, and it’s the lowest for those 18 to 24, so Gen Z. It’s going to be interesting to see how this younger demographic’s main triggers for purchasing evolve. This audience has also shown the strongest belief in the future of digital currencies and blockchain, which further signals their strong entry into the market and how they will use crypto in their lives. We’re definitely keeping an eye on Gen Z.  

In terms of next steps, we can’t wait to dive even further into speaking directly to customers, since qualitative data is incredibly important as well. One of my favorite types of research is in-depth interviews, which consists of a series of one-hour long conversations with consumers to gain deep understanding of how they perceive and navigate the crypto market so we can more deeply understand what drives their behavior and preferences. Stay tuned, as there will be even more insights coming soon.

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This does not constitute, and should not be construed as, investment advice or a recommendation to buy, sell, or otherwise transact in any investment, including any of the product(s) mentioned herein, or an invitation, offer or solicitation to engage in any investment activity. This information is provided solely on the basis that you will make your own investment decisions, and Bakkt does not take account of any investor's investment objectives, particular needs, or financial situation. It is strongly recommended that you seek professional investment advice before making any investment decision.

1 Bakkt Proprietary Study: Consumer Cryptocurrency Banking Needs. N=1,040. December 2022.