2021 was a wild year for the crypto market, with major assets like Bitcoin and Ethereum hitting new all-time highs and attracting an unprecedented amount of institutional investment. Throughout the entire year, investors worldwide took a total profit of $162.7 billion in cryptocurrencies, a fivefold increase from just $32.5 billion in 2020.
America-based investors led by a considerable margin at an estimated $47.0 billion gains ahead of investors from any other country. Meanwhile, emerging markets demonstrated a substantial growing interest in adopting cryptocurrencies and seeing such an economic opportunity.
Chainalysis’ Methodology
Blockchain analytics firm Chainalysis relied upon its transaction and web traffic data to conduct geographic analysis on cryptocurrencies and investors’ behavior.
First, the firm estimated the total gains made on each asset by studying data on holdings deposited to and withdrawn from exchanges. Secondly, by analyzing the web traffic distributed among different geographical regions on each exchange, the firm managed to estimate the total gains of digital assets by separating them into countries.
However, due to the decentralized nature of blockchain technology, the firm admitted that the data was not perfect, only including information from exchanges, and thus ideally should include a calculation on “the gains at the individual or wallet level.”
Emerging Markets Embrace Cryptocurrencies
According to Chainalysis’ report, developed countries like America, the UK, and Germany were the top three nations in terms of realized cryptocurrency gains.
Though China introduced an all-sweeping ban on the industry in 2021, the country still ranked fifth, with estimated realized digital asset gains up to $5.1 billion and an annual growth hitting 194%.
In comparison, the United States, for instance, attained year-over-year growth from $8.1 billion to $47 billion.
The report also noted that emerging economies whose collective gains in digital assets had outperformed their worldwide GDP rankings may have chosen the asset class as a reaction to domestic inflation.
Another critical point, as indicated in the document, is that Ethereum thrived in 2021, “edging out Bitcoin in total realized gains globally at $76.3 billion to $74.7 billion,” as more people have taken profits in ETH than in BTC.
This was partially attributed to the rise of DeFi, as Ethereum functioned as the primary currency for the majority of such activities and protocols. Additionally, the second-largest blockchain is the main driving force behind the rapidly-growing NFT industry.
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