Retail Crypto Investors in Emerging Economies Hit Hardest by FTX, Terra Collapses: BIS
The crypto market lost more than $450 billion after Terra's implosion in May, 2022, and another $200 billion after FTX's bankruptcy in November, the report said.
While most crypto app users worldwide lost money on their bitcoin holdings after last year's collapses of the Terra ecosystem and the FTX exchange, investors outside of major economies took the biggest hit, the Bank for International Settlements said in a report published on Monday.
Losing money in risky investments isn't exactly a new phenomenon: Last year, American investors lost $9 trillion due to falling stock prices alone. More than $450 billion vanished from the crypto market following the collapse of Terra in May, 2022, and another $200 billion was lost following FTX's bankruptcy in November, the report said.
The BIS is owned by owned by 63 central banks, representing countries from around the world that together account for about 95% of world GDP. BIS analyzed data from crypto exchange apps for 95 countries and on-chain data on the daily distribution of bitcoin holdings collected from IntoTheBlock. The data showed that from August 2015 to December 2022 almost three-quarters of users downloaded a crypto platform app when the price of bitcoin was above $20,000.
"The median investor would have lost $431 by December 2022, corresponding to almost half of their total $900 in funds invested since downloading the app. Notably, this share is even higher in several emerging market economies like Brazil, India, Pakistan, Thailand and Turkey. If investors continued to invest at a monthly frequency, over four fifths of users would have lost money," the report said.
The authors of the report assumed users invested in bitcoin "on the same day they downloaded the app" and that "each new user bought $100 of bitcoin in the month of the first app download and in each subsequent month." It's unclear how much these assumptions reflect reality – particularly whether downloading an app ensures the purchase of crypto.
The report also said larger investors might have benefited at the expense of smaller ones. "The price patterns suggest that larger investors were able to sell their assets to smaller ones before the steep price decline," it said.
Following the market collapse, regulators who were previously more concerned about crypto's impact on financial stability, have pivoted to setting up stronger safeguards for retail investors.
"Evidence suggests that crypto shocks have a limited impact on equity prices or broader financial conditions," the BIS report said.
Read more: FTX Collapse Leaves Total Crypto Market Cap Under $800B, Close to 2022 Low
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CoinDesk Data's monthly Exchange Review captures the key developments within the cryptocurrency exchange market. The report includes analyses that relate to exchange volumes, crypto derivatives trading, market segmentation by fees, fiat trading, and more.
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Trading activity softened in March as market uncertainty grew amid escalating tariff tensions between the U.S. and global trading partners. Centralized exchanges recorded their lowest combined trading volume since October, declining 6.24% to $6.79tn. This marked the third consecutive monthly decline across both market segments, with spot trading volume falling 14.1% to $1.98tn and derivatives trading slipping 2.56% to $4.81tn.
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- Institutional Crypto Trading Volume on CME Falls 23.5%: In March, total derivatives trading volume on the CME exchange fell by 23.5% to $175bn, the lowest monthly volume since October 2024. CME's market share among derivatives exchanges dropped from 4.63% to 3.64%, suggesting declining institutional interest amid current macroeconomic conditions.
- Bybit Spot Market Share Slides in March: Spot trading volume on Bybit fell by 52.1% to $81.1bn in March, coinciding with decreased trading activity following the hack of the exchange's cold wallets in February. Bybit's spot market share dropped from 7.35% to 4.10%, its lowest since July 2023.
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