We relied on the document of chain analysis who recently provided a report that details cryptocurrency flows based on geographies in the year 2021. Chainalysis is a blockchain data platform that provides data, software, services and research to government agencies, exchanges, to financial institutions and insurance and cybersecurity companies in more than 60 countries. So without much surprise, and you may have probably already guessed it, it is the country of Uncle Sam, by far, which drained the main gains across the globe in 2021.
Before moving on to the chart, you must surely ask yourself a question: “how is it possible to calculate crypto earnings within a country”. Chainalysis warns in its document, these are estimates, but the methodology used is as follows:
Total Earnings Made on Each Asset = Dollar Values of All Withdrawals – Values of All Deposits.
The difference between the two thus reflects the gains made on the different crypto addresses domiciled in each country.
To understand this, let’s take an example:
Jack is an American living in Wisconsin and Jack wanted to change his life by investing in bitcoin. He simply invested everything he had: he mortgaged everything down to his last shirt on the digital asset, the equivalent of $200,000. He returned to live with his mother while waiting to turn his capital into a digital gold mine.
Six months later, Jack finds himself with $400,000 in bitcoins. He can’t change his life yet, but he can’t stand his mother anymore. He decides to withdraw his capital and his capital gains but finally Jack cannot live the life of pasha even if he has doubled his initial capital. As part of the Chainalysis methodology, here is how Jack’s trades would be calculated:
Deposit value: $200,000
Withdrawal value: $400,000
Realized gains: $200,000
Thus, all the individuals who have made gains, like Jack, are added together in order to make an estimate of the gains made in each country. I see you coming and saying to me: “But are the losses also deducted?”. Yes the losses are deducted in the calculations of Chainalysis because indeed, otherwise, the survey would not make sense. Come on, enough suspense and let’s get to the chart.
As mentioned above, it is therefore the United States that monopolizes the ranking of gains made in crypto by country. They represent 46.96 billion dollars, or 28.86% of the total gains made in the world in 2021. Cocorico! We are indeed in the top 10 of this ranking by positioning ourselves eighth.
It should also be noted that countries with relatively low GDPs are at the top of this ranking. For example, Ukraine finds itself 40th in the ranking of the richest countries in the world (GDP = 576 billion dollars) while in the context of the gains made in crypto, it finds itself 13th, with 2.8 billion dollars made by users.
Another example is the Czech Republic, which ranks 47th in GDP (GDP = $460 billion) but 19th in cryptocurrency earnings at $1.9 billion.
Which assets are the most popular?
It’s unprecedented. Ether generated more gains than bitcoin in 2021 with $76.3 billion generated for ETH and $74.7 billion for BTC respectively (or 2.12% more). There has been a lot of interest in Ether especially with the rise of decentralized finance (DeFi) throughout the year as most protocols and decentralized applications (Dapps) are implemented on the Ethereum blockchain.
If this year 2021 has been particularly bullish (Anglo-Saxon jargon to say “bullish”) for cryptocurrencies in the wake of stock market indices, the year 2022 starts much less positively. We have a good chance of not surpassing the previous year’s performance in 2022 in terms of cryptocurrency gains. If we take a closer look at the trading volumes on Ethereum and Bitcoin, we observe that users are being carried away by the gloomy macroeconomic and geopolitical context which does not, intrinsically, contain bullish catalysts at the moment.
Weekly trading volumes on Bitcoin and Ethereum
Source: Kaiko
See you next year for a new inventory of gains made by country in 2022.