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Study finds most small investors in Bitcoin lost money, warns “market could dry up”

A new report from the Bank for International Settlements (BIS) found that the vast majority of retail investors end up losing money on their investments in Bitcoin. The researchers created a database covering the use of crypto exchange apps in 95 countries over a seven year period up to the present.

While cryptocurrencies are touted as an alternative to the traditional banking system and way to store value, their data found that retail investors were adopting the new technology primarily based on the rising price of Bitcoin.

However, as the price rose and smaller investors bought Bitcoin, the largest holders, or the so-called “whales” or “humpbacks” were offlaoding making gains at the small fishes expense. They estimate that somewhere between 73% and 81% of retail investors lost money.

The paper found that “there is the potential for self-reinforcing dynamics” of smaller investors exiting the market as they make loses and global appetite for risk declines with rising interest rates, warning “the overall market could dry up.”