Study Shows Low-Income Households Benefit From Crypto Gains to Secure Mortgages

Jimmy Aki
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Low-income households in areas with high cryptocurrency exposure are using their crypto gains to purchase homes and cars, according to a recent report by the US Treasury’s Office of Financial Research (OFR).

Crypto Gains Help Low-Income Families Secure Larger Mortgages

Research economists Samuel Hughes, Francisco Ilabaca, Jacob Lockwood, and Kevin Zhao analyzed tax data to classify “high-crypto” zip codes, defined as areas where over 6% of households reported a cryptocurrency tax event.

Their findings revealed that low-income households in these regions experienced a 250% surge in mortgage ownership. Average mortgage balances also jumped by 150%, rising from $172,000 in 2020 to $443,000 in 2024.

“Crypto sales may have supported access to larger mortgages through bigger down payments,” the researchers wrote. “The increase in borrowing is especially striking among low-income households in high crypto exposure areas.”

The study also revealed that low-income households with high crypto exposure borrow more across various loan types, including auto and credit cards. Despite this trend, delinquency rates have remained low so far, indicating no immediate financial distress.

However, the researchers warned of potential risks in the future. They noted that mortgage debt-to-income ratios in high-crypto areas exceed recommended levels, which could lead to financial instability.

“High crypto exposure may be associated with behavior that may contribute to financial instability,” the report stated.

Increased Borrowing But Rising Risks

The researchers emphasized that while there is “little evidence of current distress among households with crypto exposure,” increased leverage among low-income borrowers poses challenges. These households could face significant financial strain if the economy weakens or crypto markets crash.

The findings come amid a broader trend of rising US household debt, which hit a record $17.9 trillion in the third quarter of 2024, according to the Federal Reserve Bank of New York. Mortgages, auto loans, credit cards, and student loans have all contributed to this surge.

Historically, financial analysts have warned about the risks associated with leveraging volatile assets like cryptocurrency for major purchases. Previous market downturns, such as the 2022 crypto crash, left many investors facing significant losses.

These events underline the vulnerability of low-income households relying heavily on crypto gains to support borrowing.

Additionally, Senator Cynthia Lummis has proposed creating a national Bitcoin reserve by converting a portion of the Treasury’s 8,000 tons of gold holdings, valued at $448 billion, into Bitcoin.

She also introduced the Bitcoin Act, urging the government to acquire 1 million BTC — about 5% of the total supply — and hold it for 20 years. While this could provide some support to the financial system, experts like Avik Roy believe it falls short of addressing the $35 trillion debt crisis.

Similarly, other companies are also turning to Bitcoin as part of their corporate treasury strategy. For instance, Jiva Technologies, a Canadian wellness company, has committed to investing up to $1 million in Bitcoin.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.