US investors earn $46 billion by trading crypto in 2021

The United States has become the global leader in terms of realized crypto gains in 2021 as revealed by research from the blockchain data analytics firm Chainalysis.

In a report released on 10 April, the Coatue-backed research firm estimated the gains obtained by investors by trading cryptocurrencies last year and calculated that the US reaped a total of $ 46.95 billion in proceeds.

This makes the country the most successful at this particular activity, distantly followed by the United Kingdom, whose realized gains were estimated to be $ 8.16 billion during that same period.

In total, investors from different corners of the world earned an eye-popping total of $ 162.7 billion compared to the $ 32.5 billion they earned in 2020.

According to the report, some countries stood out as top earners when compared to their respective position in terms of their gross domestic product (GDP).

Some notable examples include Ukraine – currently at war with Russia – as the country ranked 13th in realized crypto gains despite being the world’s 40th largest economy. Meanwhile, Venezuela – currently ranked 78th by GDP – ranked 33rd with realized gains of $ 1.1 billion from its crypto dealings last year.

Interestingly, Ethereum (ETH) appears to have outpaced Bitcoin in terms of realized gains as investors earned $ 76.3 billion last year with the token that powers the popular smart contracts network while those who traded BTC earned a slightly lower figure of $ 74.7 billion.

In the United States and the United Kingdom, ETH and BTC shared a relatively equal share of the gains. However, in Japan – the third most profitable country – BTC gains outpaced those produced by ETH by a long shot.

How does Chainalysis makes these estimates?

According to Chainalysis, the methodology employed to estimate the realized gains earned by each country and crypto asset consisted of measuring the flow of multiple crypto assets by using on-chain data.

For example, they used the US dollar value of every deposit and withdrawal made per asset and estimated collective gains for all the different cryptocurrencies in the ecosystem.

The firm then determined the percentage that each country may have gained by analyzing web traffic to the sites of major crypto exchanges.

Chainalysis acknowledges that this is far from being the “perfect” approach to estimate these figures but the decentralized nature of cryptocurrencies makes it very difficult to keep track of wallet-level data while user anonymity is also a factor that complicates the task of determining where the money is going.

How can investors make money with cryptocurrencies?

Cryptocurrencies are considered financial assets. Their value appreciates against that of other currencies (fiat or digital) if demand for them starts to pick up its pace. Demand for cryptocurrencies could come from investors who believe that these assets can act as a store of value during times of economic distress or if the purchasing power of fiat currencies is expected to decline. They may also rise if they are adopted as traditionally used payment methods.

Moreover, the available supply of certain cryptocurrencies may be reduced over time through token burns – permanent elimination of a certain number of tokens – or as a result of staking, in which case the reduction might be considered temporary. In both cases, a reduced supply may lead to higher prices in the short term.

Investors can make money with cryptocurrencies if the price of the token rises or via staking, which involves receiving a periodical compensation for freezing the assets so miners within the network can process a larger share of transactions.

If investors opt to hold their tokens without selling them, any earnings they have made thus far are considered unrealized gains. Meanwhile, if the holding is converted into fiat currencies or other tokens, this would be considered a realized gain.

Crypto assets are highly volatile unregulated assets. Your capital is at risk.

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