Interest in cryptocurrencies surged like never before in 2020, with people from all over the world flocking to put their money into crypto tokens as their prices rocketed. This was true of both retail investors as well as high net worth individuals, celebrities and large companies. Notable investors, including Stanley Druckenmiller and Paul Tudor Jones, bought digital currencies; companies like Square, Tesla and MicroStrategy added bitcoin to their balance sheet; and alongside institutional investors, retail traders began to swarm the market. This understandably led to a lot of profit for many individuals and businesses, since cryptocurrency prices were on the rise for almost the entirety of last year. Even with a dip in the market since April 2021, cryptocurrencies are still far higher than they were at the same point last year. It is therefore quite interesting to note that American crypto investors made far more money than those from any other country in 2020.
According to a report by the software company Chainalysis, American investors made $4.1 billion in profits from just Bitcoin trading in 2020, and these are realized gains i.e. actual profits after Bitcoin holdings were sold, and not notional gains where the tokens are still being held. This is quite an incredible number, and it is nearly four times the next country on the list, China, where investors made $1.1 billion in realized profits.
Before diving deeper into these numbers, it is extremely interesting to see how cryptocurrencies have had an influence on the wider markets and our day to day lives during this time. More and more online businesses have begun accepting cryptocurrencies as a form of payment, with this trend being now seen in other sectors as well where physical payments are the norm. Several companies are offering cryptocurrency credit and debit cards, for example, so that customers can make payments by using their crypto holdings directly. At the same time, online marketplaces and businesses are still leading the way when it comes to accepting crypto payments, and the online gambling sector is a good example of this trend. There are now multiple online casinos and gambling operators which offer users the option to place bets via cryptocurrencies, and this sort of BTC casino has understandably proved to be quite popular with gambling fans. This is also another reason for the popularity of Bitcoin and other tokens, and it will only increase as more and more businesses begin accepting crypto payments.
Looking at crypto profits again, it is quite interesting to see that the USA is the highest for realized Bitcoin profits in 2020, since China has had the highest crypto transaction volumes in the world for years. 2020 saw record inflows into crypto from the US, which is the biggest explanation for these numbers, especially from institutional investors who have been entering crypto markets, especially Bitcoin, in the last year. Most of the profits in the US came towards the end of the year, which points towards institutional traders who would have booked their profits at the end of the year.
After China, investors in Japan earned the next highest amount, with an estimated $929 million in realized bitcoin gains. After that, U.K. investors realized $829 million, Russian investors realized $632 million and German investors realized $607 million. Country-level variations are another interesting theme to watch here – for example, Vietnam, which has an extremely robust crypto ecosystem in place, saw gains of around $350 million last year, which is quite large when compared to the size of its economy, and shows how the crypto ecosystem encouraged traders and investors in the country.