Investors who bet on the beginning of the Bitcoin boom last year have raked in the moolah. The influx of institutional dollars into Bitcoin from prominent hedge fund managers such as Paul Tudor Jones — who had reportedly compared investing in Bitcoin to investing early in Apple and Google – and enterprises including Tesla, MicroStrategy, Square, etc., triggered gradual movement for the crypto into the mainstream financial world. Consequently, the US investors were able to earn around $4.1 billion in realized Bitcoin gains in 2020 – more than three times the next highest country, China, according to a new report by software company Chainalysis ranking the top 25 countries with the biggest realised gains. Chinese investors made $1.1 billion in Bitcoin profits during the year while India ranked “surprisingly low” likely due to the government’s regulatory concerns over cryptocurrencies.
“With more than a billion citizens, India is the world’s second most populous country and has the fifth largest economy with a GDP of $2.9 trillion. However, the country ranks a surprisingly low 18th in Bitcoin investment gains at $241 million. This may be a result of the Indian government’s historical unfriendliness to cryptocurrency,” the report noted.
“India needs to focus on long-term wealth creation. We had several years of uncertainty and almost two years of crypto ban. Uncertainty prevents people from making long-term career and investment decisions. If we have enabling regulations that allow wealth and the developer ecosystem to compound, we will be in the top three in no time. In the US for example, people had the opportunity to invest during the bear market of 2018 and 2019,” Rameesh Kailasam, CEO at IndiaTech.org — industry association representing India’s consumer internet start-ups, unicorns, and investors – told Financial Express Online.
Bitcoin saw significant growth in 2020. Its price increased 3.8 times from $7,195 as of January 1, 2020, to $27,424 as of December 30, 2020, while its market cap also jumped 3.9 times from $130 billion to $509 billion in 12 months, as per CoinGecko data. “Indian investors are competing with their hands tied behind their back. The RBI, the banks, the absence of a thriving analysis ecosystem – all of it hinders trade. Maybe someday the RBI will truly realise how they dictated missing the bus?” Mathew Chacko, Partner at law firm Spice Route Legal told Financial Express Online.
To arrive at the data, the New York-based research firm Chainalysis said it could “produce a good estimate using transaction data from the services Chainalysis tracks.” It measured the on-chain flows to each cryptocurrency exchange, and approximate the total U.S. dollar gains made on Bitcoin by measuring the differences in its price at the time it was withdrawn from the platform versus when it was received. It then distributed those gains (or losses) by country based on the share of web traffic each country accounts for on each exchange’s website. This gave Chainalysis “a reasonable estimate” for the realized gains by country though it didn’t account for gains on assets that were yet to be withdrawn from an exchange.
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