+73% of Bitcoin holders are at a loss according to the BIS

Since its inception, the price of Bitcoin has fluctuated wildly, both up and down. The Bank for International Settlements (BIS) believes that in recent years, this high volatility has led to a collapse in investments by users of the cryptocurrency. In a report released this month, the financial institution estimates that nearly three-quarters of Bitcoin investors would be at a loss. The study notes, however, that the number of Bitcoin users has increased dramatically, especially among the younger generation. The results of the study and the methodology used raise some questions!

Bitcoin, not a profitable investment according to the BIS

Are “Bitcoin investors” between 2015 and 2022 mostly at a loss? This is the question that the Bank for International Settlements (BIS) wanted to answer. The banking institution has published a report whose results are not edifying…

According to the BIS, more than three quarters of Bitcoin owners would lose money compared to the initial amount invested.

In particular, the report informs that in August 2015 when Bitcoin was only worth $250, there were 119,000 daily active users.

7 years later, there are about 700 million users in 2022. For the BIS, this increase in investors does not automatically mean profitability of the sector. In particular, the report informs that more than 73% of current Bitcoin owners acquired it at a price higher than $20,000.

This amount corresponds to the value of Bitcoin in October 2022. With Bitcoin’s current value dropping to nearly $16,000, the number of investors losing money continues to grow!

We find that 73% of users downloaded their crypto app when the price of Bitcoin was above $20,000 – above the price of Bitcoin in October 2022. If these users had invested in Bitcoin on the same day they downloaded a crypto app, they would have suffered a loss on that initial investment.

BIS Report
More downloads in Bull
More downloads in Bull

The BIS report provides further insight into crypto adoption around the world. In particular, it informs that 40% of users are young men under the age of 35.

Over 40% of users are young men
Over 40% of users are young men

Are Bitcoin investors really in the red?

The BIS figures are without debate: Bitcoin investors are overwhelmingly losing money.

However, these results can be qualified. They do not take into account the investment practices in the crypto ecosystem.

Indeed, the BIS results are based on the price of bitcoin when first purchased. Yet a good portion of crypto users invest in DCA mode. This effectively allows them to mitigate the effect of volatility on their crypto investment.

Moreover, the BIS considers that Bitcoin owners have kept their investment intact so far…

In addition, there is a problem with the methodology used by the BIS. The financial institution considers that users buy Bitcoin on the day they download the exchange’s application. This is not necessarily the case. Furthermore, exchanges are not the only way to acquire Bitcoin. DEXs are increasingly growing with large transaction volumes. The BIS analysis did not take this into account!

The results of the study conducted by the BIS must be qualified. They ignore some practical aspects of crypto investing like DCA, which even El Salvador is now using. Still, these results are fairly representative of the craze around Bitcoin (BTC) during the bull market of the past year.