Between 73 and 81% of Bitcoin investors exited the market making a profit. This finding is the Bank for International Settlements (BIS) which does so. During a large study, she analyzed the movements of the cryptocurrency market between 2015 and 2021.
The idea for the BRI was to understand the implications of this new market but also to put in place the right measures to allow users to play without taking great risks (or knowingly). Bitcoin and cryptocurrencies in general are often seen as an Eldorado.
Bitcoin: a dangerous game?
From the outside all the investments seem to be the right ones and the survivorship bias only mediates people who have multiplied their bet hundreds of times. In its study on the subject, the BRI ensures that the reality is very different. The vast majority of players are losers.
The bank explains that investors who get into Bitcoin are on average men under the age of 35. Only one in three investors is a woman. A first imbalance which shows that cryptocurrencies are still a niche, known to only a few million people in the world.
The current situation is not very profitable
In 2015 the BRI estimates that nearly 350,000 people carried out regular transactions with Bitcoin. At that time the cryptocurrency was trading for 250 dollars and the owners of the time have since made a very nice profit. Today the number of active users on exchange platforms is around 32 million people according to the BRI.
For her, the vast majority of these people entered the market during a period of bitcoin’s rise. Their initial investment has still not been reimbursed, for good reason, Bitcoin has been going through a difficult period since the end of last year.
This digital currency reached its peak (ATH) in November 2021, exceeding $60,000. But since then, it’s been a cold shower for investors. Bitcoin has tumbled and the most recent affairs around the FTX platform have not helped matters.
The whale and the fish
Today the cryptocurrency is trading against less than 20,000 dollars which seems to be a stable price for a few weeks. The BRI notes in its study that the behavior of investors depends a lot on the price of cryptocurrency. The bank thus distinguishes between two types of people. On the one hand it distinguishes “beginner investors” (also called fish) who own a few bitcoins at most and on the other hand “whales” who have several hundreds of thousands of euros or even millions of euros of investment in play.
These two types of people do not react at all in the same way to the laws of the market. When the price of bitcoin is on the rise, as it was in mid-2021, whales will tend to sell to secure a profit. More modest investors will buy them, thinking of reselling them afterwards.
On the contrary, when the market is at its lowest, as has been the case in recent weeks, it is the “whales” that cause the few rare transactions. This difference in the understanding and use of the market allows the whales to make smaller but more regular profits while the “fish” must wait for a new ATH to exit their position and make money.
If you want to start investing in cryptocurrencies, here is our comparator of the best solutions available to you.