The Effects of Cryptocurrency Wealth on Household Consumption

Abstract

We use transaction-level bank and credit card data to examine how cryptocurrency wealth affects household consumption. We estimate a marginal propensity to consume (MPC) of 9.7% from crypto gains—roughly twice most previous estimates from unrealized equity gains. This higher MPC primarily reflects investor characteristics rather than asset type, as crypto investors also exhibit greater MPCs from equity gains. Consumption responses are symmetric for gains and losses and concentrated in discretionary spending. Our findings suggest that crypto wealth meaningfully influences the real economy, with households broadly treating crypto and equity wealth in similar ways.

Keywords: cryptocurrency, consumption, MPC, transaction data