2020 was an important year for Bitcoin, as an influx of institutional dollars spurred the asset to new all-time highs. But who benefited most from its booming prices? While there are many ways to approach the question, we decided to start with geography. Below, we break down estimated Bitcoin gains in 2020 by investors’ home country.
How did we do this? Geographic analysis in cryptocurrency is difficult due to the technology’s decentralized nature. It’s impossible to know for sure where the parties of any individual transaction are located. However, we can produce a good estimate using transaction data from the services Chainalysis tracks.
First, we measure the on-chain flows to each cryptocurrency exchange, and approximate the total U.S. dollar gains made on the asset in question (Bitcoin in this case) by measuring the differences in the asset’s price at the time it was withdrawn from the platform versus when it was received. We then distribute those gains (or losses) by country based on the share of web traffic each country accounts for on each exchange’s website, as we did when building our Global Crypto Adoption Index. That analysis gives us a reasonable estimate for the realized gains Bitcoin investors in each country earned in 2020, though it doesn’t account for gains on assets that have yet to be withdrawn from an exchange. For a more in-depth explanation of how we calculate cryptocurrency gains, check out our Market Intel Report from February 18, 2021.
The first thing most will notice is the United States’ apparent dominance. U.S. investors collectively made over $4 billion in realized Bitcoin gains in 2020, more than 3x the next highest country, China. This may seem surprising considering that China historically has by far the highest raw cryptocurrency transaction volume, but as we’ve covered previously, U.S.-focused exchanges saw huge inflows in 2020 that appear to have been realized toward the end of the year, which likely accounts for the country’s large gains.