“Not influenced by rumors”, three reasons why financial institutions should maintain confidence in Bitcoin

Elon Musk’s recent criticism of Bitcoin’s negative environmental impact may have depressed the cryptocurrency’s prospects, but according to new findings from Morning Consult, financial institutions reading too much into this bad news are overlooking an important trend: interest in distributed ledger technology as an asset is actually on the rise.

2021 has been a big year for Bitcoin. After months of silence, its news penetration has continued to deepen. However, for the first time since March 2020, the proportion of U.S. adults who said they had heard negative news about Bitcoin exceeded the proportion who had heard positive news.

However, negative news about Bitcoin should not scare away financial institutions seeking to launch cryptocurrency services or products to consumers. Here are three reasons why:

Reason 1: While increased volatility and negative news about Bitcoin has led to a slight drop in Bitcoin purchases, it has actually led to a significant increase in the percentage of U.S. adults considering using Coinbase, presumably to invest in other types of cryptocurrencies.

As trust in Bitcoin declines, trust in Coinbase reaches new highs, survey shows.

Reason 2: Negative news does not seem to affect Bitcoin holders enough to be worrying. Bitcoin owners either do not hear the bad news or they interpret the news differently than the general public, and the same is true for people considering buying Bitcoin.

The survey results show that 59% of the respondents said they had not heard any news about Bitcoin in the past two weeks, and 23% said they had heard mostly positive news. Among them, 57% of Bitcoin holders said that most of the news they heard about Bitcoin was positive.

Reason 3: Many financial institutions already have a high level of interest and holdings in Bitcoin among their customer base. Big brands including Wells Fargo and Fidelity currently have a high percentage of Bitcoin users in their customer base. Both Wells Fargo and Fidelity leaders have announced that they will offer crypto investment services to their customers.

It is also worth noting that Western Union has the largest percentage of Bitcoin users (46%). Consumers who frequently use remittance services such as Western Union may hold Bitcoin and hope to use Bitcoin to send or receive money at a lower fee than traditional providers.

It is largely a question of "if" rather than "when" the pendulum will swing back to Bitcoin becoming an acceptable unit of payment for businesses or users rather than a store of value. The original use case for Bitcoin and other cryptocurrencies as P2P payments grew as more people adopted them. The more "peers" you have to send or receive payments with, the more attractive Bitcoin becomes.

In addition, the survey found that most American adults who considered buying cryptocurrencies were women (52%), while men only accounted for 48%. Among Bitcoin holders, men accounted for 70%.

U.S. investors considering buying cryptocurrencies are mostly millennials (28%) and baby boomers (35%), and 52% of Bitcoin holders are millennials.

Remember, Bitcoin has had many investors since its inception in 2009. It started out as a decentralized, stable form of P2P currency that was available to anyone with a smartphone, but top bankers like Jamie Dimon believe Bitcoin has turned into a volatile, costly asset that will soon go “mainstream” as a stronger lineup of brick-and-mortar financial institutions provide it to their businesses and retail investors.

Traditional financial institutions pursuing crypto products should be concerned about Bitcoin's volatility, but more closely monitor Bitcoin holders in their existing customer base and users considering buying Bitcoin. Even financial service leaders who are not considering entering the crypto space should pay attention to their customers' holdings of Bitcoin or use of crypto trading platforms. After all, Bitcoin is now a household name, and its popularity among the general public is comparable to that of large banks.