Crypto investors realized $163 billion in profits in 2021

Crypto investors realized $163 billion in profits in 2021

Blockchain analytics firm, Chainalysis in a report said cryptocurrency investors in 2021 made a profit of $162.7 billion. This is a significant rise of over 500% from the $32.5 billion profit recorded in 2020.

Chainalysis determines the amount of profit made by tracking the difference between the funds deposited on exchanges and the value of the fund at the point when it is being withdrawn.

However, this report is only an estimate of the total profit cryptocurrency investors made during the year under review because it is based on on-chain analysis of funds movement, and not on each individual’s trading transactions.

Furthermore since blockchain transactions do not contain organic geographical information, it is difficult to get data of individual countries. Therefore estimates for each country was arrived at using Chainalysis’s transaction data and web traffic information.

According to the report, crypto investors in the United States made the most profits with approximately 29% of the total amount which is about $47 billion of the total profit.

Investors in the United Kingdom and Germany came in second and third on the ranking, being responsible for $8.1 billion and $5.8 billion respectively.

In the fourth spot is China, recording approximately $5 billion in 2021 as against $1.1 billion it achieved in 2020 to take the second spot. This is a 354.6% growth, despite the country’s ban on crypto transactions.

China in the second quarter of 2021 had banned cryptocurrency transactions and bitcoin mining.

The only African country that made it to the top 50, is South Africa. The country’s transactions accounted for $827.6 million in profits which represents 0.51% of the total profits for the year in review.

Another draw back in the report is that it only took into consideration coins that Chainalysis tracks and does not consider if investors made other losses nor taxes on the gains made.

Chainalysis further said about the report, “It’s not perfect — ideally, we’d be able to calculate gains at the individual or wallet level rather than at the service level, but this methodology still gives us a reasonable estimate of total gains for cryptocurrency users in a given country.”

“Our analysis of cryptocurrency gains should be encouraging to the cryptocurrency world, and reflects the growth of the ecosystem in 2021 — especially in DeFi. While there are still risks the industry must work to mitigate, the data not only shows that crypto asset prices are growing, but also indicates that cryptocurrency remains a source of economic opportunity for users in emerging markets.” the report added.

 

Author: Greg