According to a report published by the Bank for International Settlements, investors outside of major economies took the biggest hit when the crypto app users worldwide lost money on their bitcoin holdings after the collapses of the Terra ecosystem and the FTX exchange last year. The report stated that more than $450 billion was lost from the crypto market following the collapse of Terra in May, 2022, and another $200 billion was lost following FTX’s bankruptcy in November. This is in addition to the $9 trillion lost by American investors due to falling stock prices in the same year.
The Bank for International Settlements (BIS) recently conducted a study on the usage of crypto exchange apps in 95 countries. The study found that when the price of Bitcoin was above $20,000, almost three-quarters of users downloaded a crypto platform app. By December 2022, the median investor had lost $431, which was almost half of their total funds invested since downloading the app. The losses were even higher in several emerging market economies, such as 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 BIS study highlights the importance of understanding the risks associated with investing in cryptocurrencies and the need for investors to be aware of the potential losses they could incur.
This report examines the impact of a popular cryptocurrency app on the price of Bitcoin. It found that users who downloaded the app and invested in Bitcoin on the same day saw their investments increase in value over the first month. However, the report also suggests that larger investors may have profited at the expense of smaller ones, as they were able to sell their assets before the steep price decline. The report’s assumptions about the behavior of users are unclear, and it is uncertain whether downloading an app guarantees the purchase of cryptocurrency.
Regulators have shifted their focus from the impact of crypto on financial stability to protecting retail investors following the market collapse. According to a report from the Bank for International Settlements (BIS), crypto shocks have a limited effect on equity prices or broader financial conditions. To ensure the safety of retail investors, regulators are now setting up stronger safeguards, such as increased transparency and better consumer protection. These measures are designed to help protect investors from the risks associated with crypto investments and ensure that the market remains stable.
