U.S. Investors Made $4.1 Billion on Bitcoin in 2020. Far More Than Any Other Country.

U.S. investors made an estimated $4.1 billion in realized gains on Bitcoin in 2020, according to blockchain analytic group Chainalysis, in a recent blog post. What’s more, U.S. investors beat rivals in other countries by miles, with only China coming anywhere close at $1.1 billion.

Of course, those Bitcoin earnings pale in comparison to what investors made on stocks in the pandemic year. According to Federal Reserve data, U.S. investors made roughly $5.7 trillion on direct and indirect holdings of corporate equity in 2020, which included a dismal first quarter.

As for just how they calculated Bitcoin riches geographically, the Chainalysis team rightly points out how tough that was, given the decentralized nature of cryptocurrencies. “It’s impossible to know for sure where the parties of any individual transaction are located,” said the team, which provided an estimate using transaction data from the services the company tracks.

First they measured on-chain flows — transactions that occur on the blockchain — and approximated “total U.S. dollar gains made on Bitcoin by measuring differences in the assets price when it was withdrawn from the platform exchange, against when it was received.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,” said the team. “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Bitcoin investors in each country earned in 2020, though it doesn’t account for gains on assets that have yet to be withdrawn from an exchange.”

As for the rest of the world, Chainalysis said the lack of big investor gains in China was somewhat surprising as the country has historically had the biggest volumes of raw crypto transactions, according to its Global Crypto Adoption Index. But U.S.-geared exchanges also saw big inflows last year, which appeared to tilt toward the end of it.

One insight gained by the analysis was the discovery that many countries “appear to be punching above their weight in Bitcoin investment compared with their rankings in traditional economic metrics.” For example, Vietnam’s gross domestic product is ranked 53rd globally, but it’s 10th in Chainalysis’s cryptocurrency adoption rankings. Vietnam ranked 13th when it came to Bitcoin investment gains at $351 million, outperforming countries that rank higher in traditional economic measures.

The opposite has been seen with countries such as India, which has the fifth largest economy in the world but ranked 18th in terms of Bitcoin investment gains last year. However, India is also among those countries whose governments are less friendly to cryptocurrencies.

One country to keep an eye as far as adoption of cryptocurrencies is El Salvador, which doesn’t appear on Chainalysis’s rankings. The country’s legislators on Tuesday voted to make Bitcoin legal tender.

U.S. investors, they noted, clearly broke ahead of the pack of countries at the end of the year, coinciding with a sharp rise in Bitcoin prices in mid-October which drove money toward the cryptocurrency. Chainalysis has previously determined that long-term investors sold their cryptos to newer investors as process rose. “However, the steepness of the U.S. realized gains curve during this time suggests American investors sold at higher prices, while those in other countries held more,” they said.