Researchers interviewed more than a thousand people, roughly half of whom were Christian and the other half Muslim, on their outlook on life and, if negative, the causes of their pessimism.
"The pressure of Israeli occupation, ongoing constraints, discriminatory policies, arbitrary arrests, confiscation of lands added to the general sense of hopelessness among Palestinian Christians," the study said.
These conditions have put Palestinian Christians in "a despairing situation where they can no longer perceive a future for their offspring or for themselves," it added.
Bernard Sabella, a member of the Palestinian Legislative Council and one of the authors of the study, said: "It is not the fear of disappearance Palestinian Christians fear the most, rather losing their space in society".
He stressed that the conflict with Israel and the lack of a political solution to the occupation of Palestinian territories served as the main causes for the reduction in the number of Palestinian Christians.
In Jerusalem and Bethlehem, the traditional birthplace of Christianity, Palestinian Christians are rapidly disappearing under the current political and economic conditions.
"Palestinian identity needs to be highlighted and emphasised," Sabella added.
The study also found that 50 percent of interviewed Christians and 54 percent of Muslims were optimistic that their situation would eventually improve and attributed their optimism to the belief that God is on their side.
"This finding reflects the religiosity of the Palestinian people," said Varsen Aghabekian, another of the study's authors.
Only two percent of Christians attributed their pessimism to "religious extremism", while the percentage among their Muslim counterparts was double that at four percent.
A majority of Christians and Muslims said the political conflict with Israel made them feel unsafe.
"I can say with a lot of certainty that the migration [of Palestinian Christians] was never caused by religious persecution," said Aghabekian
Christian migration out of Palestine began in the Ottoman period and was mainly about seeking economic opportunities in North and Latin America.
But recent migration has been tied to regional instability and the conflict with Israel, according to the study.
Between 1860 and 1914, Palestinian Christians were about 11 percent of the Palestinian population of 350,000 people.
On the eve of World War I, the Palestinian population reached 616,000, of which 69,000 were Christians.
Today Palestinian Christians in all of historical Palestine, which includes Israel, the West Bank and Gaza account for only 1.7 percent of the Palestinian population of six million.
Iskandar El Hinn, a Christian Palestinian whose family fled Jaffa to Ramallah when Israel was founded in 1948, told Al Jazeera that he had never thought of leaving Palestine.
Instead, he said he encourages his children and grandchildren to remain steadfast and hold on to their land.
"As a Palestinian, I am living where I belong, everywhere I go here is Palestine to me and Jerusalem is its capital," he said.
"We have been living here for thousands of years; no one can take us away from here."