Switzerland-based Bank of International Settlements (BIS) in a study revealed that one-third of retail investors lost money in bitcoin, media reports said. The findings are part of the BIS working paper — Crypto Trading and Bitcoin Prices: Evidence from a new database of retail adoption.
It noted that due to price declines, “an estimated 73-81% of retail investors have likely lost money on their initial investment.”
Authors Raphael Auer, Giulio Cornelli, Sebastian Doerr, Jon Frost, and Leonardo Gambacorta created a database of crypto exchange apps used by retail investors daily in 95 countries between 2015 and 2022.
Noting that a vast majority of app downloads happened when Bitcoin (BTC) was trading above the level of $20,000, the Swiss study also gave a profile of harried investors who are “new, disproportionately younger and male, commonly identified as the most “risk-seeking” segment of the population.”
The study noted that retail investors continue to be drawn to the digital asset class despite high volatility. Also, crypto acceptance and infrastructure are still in undeveloped stage to and digital assets are not being used for daily payments.
Still it is surprising despite risks, retail investors continue to join crypto exchanges to trade crypto currencies like Bitcoin. In the last year, bitcoin prices crashed more than 75 percent, and the collapse of 3AC collapse and FTX further worsened investors’ confidence.
The BIS study asserts that rising Bitcoin prices are “what drive crypto adoption rather than alternative explanations.”
Among the countries it studied on high crypto adoption in last 7 years, Turkey, Singapore, the United States, and the United Kingdom are at the top.
The lowest adoption rate was found in China and India due to stringent legal curbs preventing crypto adoption.
