Experts from the Switzerland-based Bank for International Settlements establishedthat 73% to 81% of retail bitcoin buyers only experience losses on investments. In other words, bitcoin is worth less today than it was when it was bought: Over the past five years, the price has risen 155%, but over the past year it has fallen 73%.
The International Central Bank coordinator decided to find out what motivates retail investors – those investing small amounts – to join crypto exchanges and participate in trading digital assets like Bitcoin. The question is really not easy, because consumers usually do not use cryptocurrencies for everyday payments, do not buy goods and investment products for them.
In search of an answer to this question, the researchers created a database of crypto exchange applications used by retail investors from 95 countries between 2015 and 2022. Experts have noted that with the growth of Bitcoin, users are more likely to download and install applications for cryptocurrency exchanges – most often this is done by young men, that is, the most risk-averse segment of consumers. Indeed, they are a source of income for larger investors: professionals sell their assets and new entrants increase cryptocurrency prices.
As a result, 73-81% of retail crypto investors are left with losses. And because of this trend, the claim that cryptocurrencies are “democratizing” the financial system requires in-depth investigation. The data from Swiss financiers is consistent with the losses that ordinary consumers suffer when trying to invest in risky and speculative financial assets. For example, in over-the-counter trading of traditional currencies, 70% of clients lose money on a quarterly basis, and in 12 months this number reaches 100%. More profitable investments are even casinos, where the probability of losing can be “only” 56-58%, depending on the game.