Crypto investors bounced back in 2023, reaping substantial profits after a challenging period, according to blockchain analytics firm Chainalysis. The report indicates that realized gains, which are profits made from selling assets above their purchase price, totaled $37.6 billion in 2023. This marks a notable recovery from the $127.1 billion in realized losses reported in 2022 but falls short of the $159.7 billion in gains seen during the 2021 bull market.
Consistent Gains Amid Market Fluctuations
Despite fluctuations in the market, 2023 saw consistent gains, with only two consecutive months of losses in August and September. These losses coincided with a crackdown on crypto companies in the United States. However, gains rebounded strongly in November and December as investors anticipated the approval of Bitcoin exchange-traded funds (ETFs).
Global Distribution of Gains
The United States led the pack with an estimated $9.36 billion in realized gains, followed by the United Kingdom with $1.39 billion. Other countries, including Vietnam, China, Indonesia, India, Russia, and South Korea, also recorded realized gains exceeding $1 billion.
Factors Behind the Lower Total Gains Compared to 2021
Chainalysis suggests that one reason for the lower total gains in 2023 compared to 2021, despite similar growth rates in crypto asset prices, could be investors’ reluctance to convert crypto assets into cash. This hesitancy may stem from the expectation of further price increases.
Strong Crypto Adoption in Middle-Income Countries
The report highlights strong cryptocurrency adoption in middle-income countries like Vietnam, China, Indonesia, and India. Residents in these countries achieved significant gains, showcasing the resilience of crypto adoption even during bear markets.
