Most Retail Crypto Investors Lost Money Over the Last 7 Years, According to BIS Analysis

According to data from the Bank for International Settlements (BIS), published in the latest BIS Bulletin No. 69, researchers have calculated that, on average, most users have lost money on their investments over the past seven years. Network data, metrics from exchanges, and cryptocurrency app download statistics collected by BIS researchers show that the majority of median retail crypto investors lost money from August 2015 to the end of 2022.

BIS Report Shows Most Retail Bitcoin Investors Have Lost Money Over the Past Seven Years

Following the release of three policy recommendations from Bank for International Settlements (BIS) economists to global regulators, BIS released a report that explores “crypto shocks and retail losses.” report originally covers the collapse of Terra/Luna and the bankruptcy of FTX, during which researchers observed a significant increase in retail trading activity.

At the time, BIS researchers noted that “large and sophisticated investors” were selling and “small retail investors” were buying. The section titled “In stormy seas ‘whales eat krill'” details that “a striking pattern during both episodes was a marked increase in trading activity across the three major cryptocurrency trading platforms.”

According to BIS analysis, most retail crypto investors have lost money in the last 7 years

The BIS researchers note that “larger investors were likely cashing out at the expense of smaller holders.” The report adds that the whales have sold a significant portion of bitcoin (BTC) in the days following the initial turmoil from Terra/Luna and the collapse of FTX. “Mid-sized, and even smaller (krill) holders have increased their bitcoin holdings,” the BIS researchers explain.

In the second part of the report, BIS calculated metrics based on network data, general app download statistics, and exchange data to assess whether the majority of median retail crypto investors made money or lost money over the past seven years. The data was collected from August 2015 to mid-December 2022 in a section titled “Retail investors chased prices and most of them lost money.”

BIS ran a series of simulations such as the average dollar value of $100 per BTC per month, and concluded that over a seven-year period, “most investors likely lost money on their bitcoin investments” in almost every country in the researcher’s sample. Despite the activity surrounding the Terra/Luna fiasco, the FTX bankruptcy, and statistics indicating that the average retail cryptocurrency investor has lost money over the past seven years, BIS researchers insist that “the collapse of cryptocurrencies has little effect on financial conditions in general. “.

Retail losses and patterns continue to point BIS researchers to the need for “better investor protection in the crypto space.” While the analysis shows that there has been a “dramatic decline in the size of the crypto sector,” this has “so far had no impact on the financial system as a whole.” However, the BIS researchers argue that if cryptoeconomics were more “intertwined with the real economy”, cryptoshocks would have had a much greater impact.

What do you think of the BIS report on crypto shocks and retail losses? Let us know your thoughts in the comments section below.

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