Most investors have lost money after buying bitcoin, according to a new report published by the Bank for International Settlements (BIS), also known as the “central bank of central banks.”
The BIS report states that bitcoin investors buy the digital currency for profit, not to evade banks and governments – that’s why it was created – or to use bitcoin as a store of value.
In the document published on Monday (14), the BIS analyzed the links between bitcoin price, trading volumes and cryptocurrency adoption. One of the most important parameters was the stats of cryptocurrency trading app downloads.
Along with the report, the researchers released a database on the use of cryptocurrency trading apps in 95 countries from 2015 to 2022.
Higher price, more demand for Bitcoin
The BIS found that Bitcoin price increases are triggering a wave of retail investors downloading cryptocurrency apps.
“Overall, our results suggest that rising Bitcoin prices are cryptocurrency adoption”they said. Bitcoin’s price, in particular, remains the most important factor when controlling for global uncertainty or volatility, contradicting statements based on Bitcoin as a safe haven.— they added.
The researchers said that as the price of bitcoin rose, there was a significant increase in the number of downloads of apps for trading cryptocurrencies and “Most retail investors download apps at a time of high prices.”
“Particularly with data from 2015-22 showing that users are more likely to actively use cryptocurrency apps in months after a Bitcoin price spike.”
Speculation
The BIS concluded that bitcoin adoption and usage patterns “are consistent with the speculative motive, i.e. users are drawn to Bitcoin by rising prices – rather than an aversion to traditional banks, seeking a store of value or distrust of public institutions”🇧🇷
In addition, the BIS said that as prices rose and new investors bought Bitcoin, the largest holders (the so-called “whales”) sold – making a profit at the expense of new users.
The BIS stated that its findings raise concerns that bitcoin investors are not fully aware of the risks associated with the cryptocurrency sector.
Then the document also reveals that as interest rates rise and global risk appetite declines, “the general market may dry up”.
Going further, the BIS states that investors seek Bitcoin as a gamble rather than a medium and exchange.
“Our findings shed light on the motivation for retail investors to get into cryptocurrencies. They support the idea that investors generally view cryptocurrencies as a speculative investment (a “gamble”) rather than a means of payment and economic transactions.
Finally, the document states that more than 80% of investors have lost money after investing in Bitcoin or other cryptocurrencies.
“Our estimates that 73-81% of global investors have likely lost money on their cryptocurrency investment.”
Despite criticism of Bitcoin and cryptocurrencies, the BIS recently said authorities should create digital currencies “as soon as possible.”
Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
