The number of crypto users has doubled in four months, reaching around 221 million in June.
Cryptocurrency adoption gained unprecedented momentum during the first half of 2021 as crypto markets added more than 100 million users from February to May, according to a new Crypto.com report. The report dubbed ‘Measuring Global Crypto Users’ was first released in May 2020, and at that time, the cryptocurrency user population was standing at around 66 million.
The pace of adoption accelerated in the second half of 2020 due to several reasons including the risk of rising inflation, the depleting U.S. dollar, and a surprise rise in Decentralized Finance (DeFi). Crypto adoption from fintech companies including PayPal in last November and corporations adding Bitcoin (BTC) to their balance sheets also helped increase the rate of adoption.
Crypto adoption boomed in 2021
Crypto adoption experienced substantial growth in the first half of 2021, with crypto owners growing from 100 million at the beginning of the year to 221 million by the end of June. For comparison, it took nine months for the number of global crypto users to reach 100 million from 65 million in May 2020.
Why did the number of users grow in the first half of 2021?
The crypto price hike attracted investors to the nascent market. Bitcoin and the rest of the crypto market saw huge growth in the first four months of this year, stretching the entire crypto market cap to an all-time high of $2.5 trillion in May.
CEO of Tesla Elon Musk also played a key role in the wider crypto adoption. Earlier this year, Tesla announced that it would accept Bitcoin as a valid form of payment. In addition, payment companies Mastercard and Visa announced their support for crypto-related transactions. Banking giants also started announcing crypto products and services for wealthy clients.
Altcoin adoption played a key role in crypto population growth
It’s not all about Bitcoin. The second most valuable cryptocurrency and other altcoins played a huge role in increasing the crypto population.
It is vital to break down the data to find what backed the growth in crypto users. From January to April, Bitcoin led the growth as institutions and corporations announced plans to support de-facto crypto leaders.
On the other hand, the largest altcoin Ethereum (ETH) saw significant growth in May and June, driven by the increasing use of its networks on DeFi platform and dApps. Institutional investors continued to favor the token in the second quarter of 2021.
While Bitcoin and Ethereum’s popularity helped increase crypto adoption, the report also noted that both cryptocurrencies lost their market share in the first half of 2021.
At the end of June, the percentage of Bitcoin ownership fell to 51% from 67% at the beginning of the year, while the percentage of altcoins ownership (excluding Ethereum) grew from 20% in January to 38% at the end of June. Crypto.com’s findings show that altcoin adoption was spurred by interest in Dogecoin (DOGE) and Shiba Token (SHIB). Elon Musk’s criticism over the Bitcoin mining process and clampdown from Chinese authorities helped these altcoins gain market share.
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