According to Bank for International Settlements (BIS) data published in the latest BIS Bulletin No. 69, researchers assessed that on average, most users lost money on their investments over the past seven years. Onchain data, indicators from exchanges, and download statistics for cryptocurrency applications collected by BIS researchers suggest that most median retail crypto investors lost money between August 2015 and the end of 2022.
BIS report shows that the majority of retail bitcoin investors have lost money over the past seven years
After releasing three policy recommendations for global regulators from economists at the Bank for International Settlements (BIS), the BIS released a report exploring “crypto shocks and retail losses. “18} The reportfirst covers the collapse of Terra/Luna and the bankruptcy of FTX and during that time researchers observed a significant increase in retail trading activity.
At the time, BIS researchers noted that “large, sophisticated investors” were selling and “small, private investors” were buying In Stormy Seas, in a section titled ‘the Whales Eat the Krill,’ “a striking pattern during both episodes was a marked increase in trading activity on the three major crypto trading platforms,” it detailed.
The BIS researchers noted that “big investors probably cashed out at the expense of smaller holders.” The report adds that whales sold a significant portion ofBitcoin (BTC)in the days following the initial shock from Terra/Luna and the FTX collapse.” Medium-sized holders and even smaller holders (krill) increased their bitcoin holdings,” the BIS researcher explained.
In the second part of the report, BIS calculated metrics from on-chain data, application-wide download statistics, and exchange data to assess whether the most central retail cryptocurrency investors have profited or lost over the past seven years. Data was collected from August 2015 through mid-December 2022, with a section titled “Retail Investors Have Chased Prices, and Most Have Lost Money.”
BIS ran a series of simulations, including purchasing $100of BTCmonthly using dollar cost averaging, and found that over a seven-year period, in nearly every economy in the researchers’ sample, “the majority of investors probably lost money on their Bitcoin investments,” concluding that despite the Terra/Luna debacle, the activity resulting from the FTX bankruptcy, and statistics showing that the median retail investor in cryptocurrencies lost money over the past seven years, the BIS researchers “argue that the crypto crash has had little . and has had little impact.”
Retail losses and patterns still suggest to BIS researchers the need for “better investor protection in the crypto space.” The analysis indicates that there has been a “sharp decline in the size of the crypto sector,” but that it has “so far not affected the broader financial system.” However, the BIS researchers argue that crypto shocks would have a much greater impact if the crypto economy were more “intertwined with the real economy.”
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