The year 2023 witnessed a notable recovery for cryptocurrency markets, characterized by an upswing in asset prices and improved market sentiment following the challenges encountered in 2022. However, to what extent did investors truly benefit from these developments? This blog delves into our 2023 estimates of crypto gains based on investors’ interactions with centralized exchanges, providing insights into the gains accrued across different countries.
Methodology: Calculating Cryptocurrency Gains and Estimating Country-specific Gains Our approach involves leveraging on-chain data to estimate investors’ crypto gains, focusing on the movements of crypto assets in and out of services facilitating crypto-to-fiat conversions. Specifically, we analyze the macro-level flows of select assets, which represent a significant portion of the overall market capitalization. By comparing the U.S. dollar value of asset withdrawals and deposits, we derive estimates of total gains made on each asset. Although not without limitations, this methodology offers a robust estimate of gains across popular assets traded on centralized exchanges.
Upon estimating gains for users of each tracked service, we distribute these gains to individual countries based on the respective share of web traffic represented by each country. This combination of transaction data and web traffic forms the framework for calculating our annual Global Crypto Adoption Index.
Estimated Total Cryptocurrency Gains in 2023 Overall, we estimate that crypto investors worldwide achieved total gains amounting to $37.6 billion in 2023. While this figure is significantly lower than the gains observed during the 2021 bull market, it marks a substantial recovery from the losses experienced in 2022, which amounted to an estimated $127.1 billion.
Despite crypto asset prices experiencing similar growth rates in 2023 compared to 2021, the total gains were notably lower. This discrepancy could be attributed to investors’ reluctance to convert crypto assets into cash, anticipating further price increases, especially since prices did not surpass previous all-time highs throughout 2023.
Cryptocurrency gains exhibited consistency throughout most of the year, with a notable downturn observed in August and September, followed by a sharp rise in November and December, surpassing gains from previous months.
Estimated Cryptocurrency Gains by Country in 2023 The United States emerged as the leader in cryptocurrency gains in 2023, with an estimated $9.36 billion, followed by the UK with $1.39 billion. Interestingly, several upper and lower-middle-income countries, particularly in Asia such as Vietnam, China, Indonesia, and India, recorded substantial gains, ranking among the top six countries. These findings align with our previous observations of strong cryptocurrency adoption in these regions, even during bear markets, as highlighted in our 2023 Geography of Cryptocurrency Report.
Outlook for 2024 The positive trends observed in 2023 have continued into 2024, with prominent crypto assets like Bitcoin reaching all-time highs following Bitcoin ETF approvals and increased institutional adoption. If these trends persist, we may anticipate gains reminiscent of those witnessed in 2021. As of March 13, Bitcoin has surged by 65.4%, and Ether by 70.2% in 2024, signaling promising prospects for the year ahead.
