Cryptocurrency riches are generating a new breed of luxury customers in the United States.

• According to Jefferies, a rise in cryptocurrency prices is causing young individuals to spend their gains on luxury items.
• With their cryptocurrency earnings, people under the age of 35 are purchasing artwork, premium goods, and other items.
• During 2021, the bitcoin market temporarily surpassed $3 trillion.

According to a research from Jefferies, the rise in cryptocurrency prices is helping to create a new crop of young, American buyers of luxury goods, with their spending on NFT artwork and high-priced fashion poised to boost sales in the luxury industry beyond pre-pandemic levels.

In terms of global luxury spending, Chinese consumers continue to be the most powerful driver. However, robust year-over-year growth in the US has been a "surprise package" since the first quarter, according to a research note released by the investment bank on Wednesday. The findings were based on trips to 48 stores in New York and Florida that sell high-end labels such as Louis Vuitton and Gucci, which are both owned by Kering.

"We underline the large jump in asset values (from stock market to real estate to contemporary art) and, above all, the significant influence from cryptocurrency wealth, which has boosted the total number of cash transactions again," wrote equities analysts Flavio Cereda and Kathryn Parker.

Conversations with store managers and helpers appear to indicate that people under the age of 35 are using bitcoin income to buy art, including non-fungible tokens, as well as pricey jewelry, garments, and accessories.

"Based on our interactions, this phenomena may have generated anywhere from 20% to 25% of [last 12-month] revenues," the analysts added.

For the first time in 2021, the crypto market surpassed a $3 trillion valuation, owing to increased institutional and individual investment in digital assets ranging from cryptocurrencies to NFT art. Bitcoin's price has risen by 62 percent this year as of mid-Wednesday, with the most widely traded cryptocurrency now trading at over $47,200. However, the crypto market's market size has dropped to $2.3 trillion as a result of wild price volatility.

Further strengthening its horizons, sports leagues have aggressively embraced cryptocurrency, spawning a sponsorship category that didn't exist less than a year ago.

Following a $100 million sponsorship deal with Liberty Media-owned Formula 1, Crypto.com announced a $175 million contract with Endeavor-owned UFC, which will see its logo appear on athletes' competition clothing.

Bitcoin has certainly entered the mainstream, despite its recent decline.

Not only are regular investors interested in it, but so are a number of huge corporations.

MicroStrategy, a business software expert, is a good example. Despite the fact that it is now the world's largest corporate bitcoin holder, management continues to add to its vault.

MicroStrategy bought 1,434 bitcoins for $82.4 million between Nov. 29 and Dec. 8, taking advantage of the cryptocurrency's drop from all-time highs. This increased MicroStrategy's total bitcoin holdings to 122,478 coins, valued at $5.9 billion.

According to MicroStrategy CEO Michael Saylor, bitcoin is "going up forever," therefore the company's recent purchases should come as no surprise.

Jefferies' channel checks took place at the Art Basel international art exhibition in Miami, as well as a number of key crypto-trading events, "resulting in a nearly perfect pool of interlocutors," it claimed.

According to the firm, US luxury expenditure in fiscal year 2021 will be back to levels seen in 2019, before to the coronavirus outbreak. According to the report, such spending might increase by 45 percent by fiscal year 2023 compared to the same period in 2019.

"This is heavily dependent on the robustness of the underlying assets that allow monetisation and is hence inherently volatile," it said. "However, unlike China, it is not subject to the risk of increased government pressure."