Crypto Gains Are Not Spent on Luxury, Researchers Unveil

• In a recent paper, a group of researchers studied the impact of crypto gains on the American economy.
• The study unveils that the crypto gains were not spent on luxurious items but on home purchases, real estate etc.
• Researchers posit that crypto gains cannot be compared to a lottery win or gambling.

A recent Bloomberg report spotted a group of researchers who studied the “wealth effect” of cryptocurrencies in the American economy. The researchers identified that the unexpected gains from crypto were not spent on luxury items like Lamborghini, as often narrated on social media.

Notably, researchers like Darren Aiello and Noelle Acheson presented the paper to the Federal Deposit Insurance Corp. in March. Darren Aiello, Assistant Professor of Finance at Brigham Young University’s Marriott School of Business, asserted that investors spend their gains in a pattern that resembles traditional equity investments. He stated,

“If households tend to treat crypto like gambling, then we would expect them to spend their gains in similar ways as lottery winners do. In contrast, our estimates suggest that household spending out of crypto gains is more like the patterns we see from traditional equity investments.”

The study revealed that the gains of crypto investments couldn’t be compared with lottery wins or gambling. In addition, the researchers asserted that a significant portion of the individuals invested their gains in real estate, leading to a boost in local housing markets in states like California, Nevada, and Utah, where crypto is more popular.

Noelle Acheson, the author of “Crypto Is Macro Now,” highlighted the difference in utilizing crypto gains in different groups. She cited,

“For lower-income investors placing less priority on wealth preservation, a crypto allocation could be seen as a make-or-break play — more to gain than to lose. So it makes sense that any gains would be spent on big-ticket items such as a house.”

In addition, the researchers discovered that crypto wealth has a remarkable impact on households’ consumption as it surged by about $30 billion in a decade. Unlike the flexes on social media, the money wasn’t spent on Lamborghinis but on home purchases, real estate, etc.