American Investors Led in Realized Crypto Gains in 2021: Report

2021 has been a wild year for the crypto market, with major assets such as Bitcoin and Ethereum hitting record highs and attracting unprecedented institutional investment. For the full year, global investors made $162.7 billion in total profits from cryptocurrencies, a fivefold increase from $32.5 billion in 2020.

U.S. investors lead investors in any other country by a sizable profit, with an estimated gain of $47 billion. At the same time, emerging markets are showing increasing interest in adopting cryptocurrencies and seeing such economic opportunities.

Methodology of Chainalysis

Blockchain analytics firm Chainalysis relies on its transaction and web traffic data for geographic analysis of cryptocurrencies and investor behavior.

First, the company estimates total returns for each asset by studying holdings data deposited into and pulled from exchanges. Second, by analyzing the network traffic distributed between the different geographic regions of each exchange, the company managed to estimate the total return of digital assets by dividing them into countries.

However, due to the decentralized nature of blockchain technology, the company admits that the data is not perfect and only includes information from exchanges, so should ideally include calculations of “earnings at the individual or wallet level.”

Emerging markets embrace cryptocurrencies

According to the Chainalysis report, developed countries such as the US, UK, and Germany are the top three countries in terms of realized cryptocurrency gains.

Despite China’s blanket ban on the industry in 2021, the country is still ranked fifth, with an estimated $5.1 billion in realized digital asset gains, an annual growth rate of 194 percent.

In contrast, the United States, for example, saw year-over-year growth from $8.1 billion to $47 billion.

The report also noted that emerging economies whose collective gains from digital assets outpaced their global GDP rankings may have chosen the asset class as a response to domestic inflation.

Another key point, as noted in the document, is that Ethereum is booming in 2021, “achieving total global gains of $76.3 billion to $74.7 billion surpassing Bitcoin’s” as those who profit from ETH More people than profit in BTC.

This is partly due to the rise of DeFi, as Ethereum is the dominant currency for most of these activities and protocols. Furthermore, the second largest blockchain is the main driving force behind the rapidly growing NFT industry.