Study: Low FICO Users Driving Crypto Growth with balances growing by 340% YoY

Posted by Frank Gogol

Key Findings

– 53% of Coinbase users have a FICO score under 650 (in the Very Poor to Fair range according to Experian)

– Coinbase users increased their account balances by 2.7x YoY between January 2020 and January 2021

– Low FICO score Coinbase users increased their balances by net $8,099 (+340%) YoY, compared to a net $4,092 (+168%) increase among high FICO users

This past Friday, Bitcoin’s price topped $56,000, nearly doubling its value of $29,000 from the start of 2021 and pushing the combined value of all bitcoins past one trillion dollars for the first time in the cryptocurrency’s 12-year history.

With Bitcoin (and other hot stock topics like Robinhood and Dogecoin) on everyone’s radars of late, we thought it might be worthwhile to take a look look at Bitcoin and the state of cryptocurrency, in general.

Is the market growing? And if so, who’s driving that growth? Our data showed a surprising trend.

Bitcoin’s Rapid Growth

As mentioned above, Bitcoin’s seen huge growth over the last year, particularly in the last six months:

While it’s a big deal for cryptocurrency advocates that Bitcoin crossed the trillion-dollar mark, it’s probably not surprising, considering the strong performance of Bitcoin over the last year — especially during the last six months.

According to publicly available data from Coinbase, Bitcoin prices averaged $8,353.95 in January 2020 and saw mostly steady-to-meteoric monthly increases from there.

The average price for Bitcoin a year later, in January 2021, had risen to $34,730.12 (+315% YoY). What’s even more impressive is that the month-over-month increases have been significant over the last several months:

MonthAverage ValueMoM Growth ($)MoM Growth (%)
Oct 20$11,909.40$1,243.3412%
Nov 20$16,645.11$4,735.7140%
Dec 20$21,970.92$5,325.8132%
Jan 21$34,730.12$12,759.2058%

For each of the last three months, Bitcoin’s average month-over-month value has increased by at least 32%. Between December 2020 and January 2021, it more than double in value.

Coinbase Users Increased the Account Balances by 2.7x YoY

With Bitcoin’s huge gains in mind, we wanted to zoom out a bit and get a sense of the overall state of the crypto market. Looking specifically at Coinbase transactions, our data showed consistent growth for cryptocurrencies at the macro-level, too:

The data tells a pretty clear story: cryptocurrency interest and investing is, and has been, on the rise. Between January 2020 and January 2021, Coinbase users added an average of $4,856.95 to their accounts and the average account balance across users grow by 2.7x.

Interestingly, Coinbase account balance growth trends a bit differently than what we saw for Bitcoin. In the early months of 2020, the average Coinbase account balance was growing by hundreds of dollars a month:

MonthAvg. Account BalanceMoM Increase ($)MoM Increase (%)
Feb 20$3,527.62$714.3425.39%
Mar 20$4,680.59$1,152.9732.68%
Apr 20$5,531.43$850.8418.18%

From February 2020 to April 2020, average account balances grew anywhere from 18% to 33% month-over-month. But in May 2020, the rate of increase slowed dramatically:

MonthAvg. Account BalanceMoM Increase ($)MoM Increase (%)
May 20$5,702.11$170.683.09%
Jun 20$5,876.35$174.243.06%
Jul 20$6,092.80$216.453.68%
Aug 20$6,400.54$307.745.05%
Sep 20$6,725.24$324.705.07%
Oct 20$6,980.36$255.123.79%
Nov 20$7,059.83$79.471.14%
Dec 20$7,256.09$196.262.78%
Jan 21$7,670.23$414.145.71%

In the months since April 2020, average account balance growth has ranged from 3% to 6%, averaging 3.71% growth month-over-month during that period.

The slowing of growth can almost certainly be linked to the COVID-19 pandemic and uncertainty across all markets. In spite of that, the Coinbase data shows us that the cryptocurrency market this growing at a healthy and fairly consistent rate.

53% of Coinbase Users Have a FICO Score Under 650

Next, we took a look at how Coinbase users broke down across FICO scores and found that more than half of Coinbase users have a credit score of less than 650.

Of the users considered in this study, nearly 53% have a credit score that Experian would identify as Very Poor to Fair (under 650). This means lower FICO score users on Coinbase outnumber users in the other two credit buckets combined.

Coinbase users with FICO scores from 650-750 (Good to Very Good) make up ~36% of the overall users, while those with credits scores above 750 (Very Good to Exception) only make up ~12% of Coinbase users.

Low FICO Coinbase Users Increased Balances by 340% YoY

So, if more than half of Coinbase users fall into the <650 FICO score bucket, and the average Coinbase user balance has grown month-over-month for most of the last year, we wanted to know just how much low FICO users were driving that growth.

And it turns out it was a lot.

At a glance, user balances grew across all three FICO score buckets, but users in the <650 clearly outpaced other users in balance-growth. If we compare January 2020 to January 2021, it tells a very clear story:

Month<650650-750>750
January 2020$2,379.00$3,180.00$2,430.00
January 2021$10,478.00$5,953.00$6,522.00
Growth ($)$8,099.00$2,773.00$4,092.00
Growth (%)340%87%168%

In January 2020, Coinbase users in the 650-750 FICO range had the highest average balance at $3,180 (~ 25% more than users in the other two buckets). Over the next year, the average balance of users in all three buckets increased, but for users in that 650-750 range, that average balance grew by $2,773 (+87% YoY).

Users in the >750 bucket had the second-highest average account balance in January 2020 — at $2,430 — and grew their balances by an average of $4,092 (+168% YoY) over the same twelve-month period.

Low FICO score users, however, saw the largest average balance growth during that period. Starting with the lowest average balance, <650 users added an average of $8,099 to their Coinbase accounts and had an average account balance of $10,478 in January 2021 (340% YoY).

These stats, looked at another way, show us that low FICO users invested in cryptocurrency at 2x the rate of users with >750 credit scores and nearly 3x the rate of users in the 650-750 range.


Methodology

The transaction-related data used in this report was collected from one million unique transactions made by 1,541 Stilt applicants between January 1, 2020 and January 31, 2021. All credit score-related data was collected from the same Stilt applicants during the same period.

This data was prepared by Rohit Mittal, Stilt’s CEO and former Data Scientist with POPSUGAR and Verisk Analytics.

Additional data regarding Bitcoin performance between January 1, 2020 and January 31, 2021 was procured through Coinbase’s publicly available data.

The findings of this report are based on an analysis of that data. Credit score statistics were determined by averaging all investment amounts in specific credit score ranges (less than 650, 650 to 750, and greater than 750) during the dates noted above.

Stilt “applicants” include both Stilt customers and those who still could not offer services. Applicants include, but are not limited to: naturalized citizens, green card holders, visa holders, asylum-seekers, and other designations of immigrants in the U.S. as well as non-immigrant U.S. citizens.

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