Chainalysis: 2023 Global Cryptocurrency Market Revenue Overview
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Chainalysis: 2023 Global Cryptocurrency Market Revenue Overview
The positive trends from 2023 have carried over into 2024.
Navigating Web3 tides with focused insightsAuthor: CHAINALYSIS TEAM
Translation: Yvonne, Mars Finance
2023 was a year of recovery for the cryptocurrency market. After a challenging 2022, asset prices and market sentiment both improved throughout the year. But how did investors actually perform? In this article, we share our estimates of cryptocurrency gains in 2023 based on investor interactions with centralized exchanges, including a breakdown of estimated gains by country.
Our Methodology: How We Calculate Cryptocurrency Gains and Estimate Them by Country
We use on-chain data to estimate investor cryptocurrency gains, measuring the flow of crypto assets into and out of services where digital assets can be converted to fiat currency. Specifically, we first measure the macro-level on-chain flows of a selected set of assets—representing approximately 80% of the total cryptocurrency market capitalization—that are traded on major centralized exchanges offering crypto-to-fiat conversion services. Then, for each asset, we estimate collective net gains by calculating the difference between the dollar value of all withdrawals and the dollar value of all deposits. This approach is based on the premise that any deposit into a service enabling off-ramp to cash could potentially realize profits or losses from that asset. While not perfect, this method provides a robust estimate of realized gains on popular assets traded via centralized exchanges.
Once we estimate the gains realized by users across each service we track using this methodology, we allocate those gains to individual countries based on each country’s share of web traffic to each service. This combination of transaction data and web traffic metrics is the same framework we use to calculate our annual Global Crypto Adoption Index.
Estimated Total Cryptocurrency Gains in 2023
Overall, we estimate that all cryptocurrency investors realized total gains of $37.6 billion in 2023.
While this total is far below the $159.7 billion in gains during the 2021 bull market, it represents a significant rebound compared to the estimated $127.1 billion in losses in 2022. Interestingly, our estimated gains for 2023 are lower than in 2021, despite similar rates of growth in crypto asset prices in both years. One possible explanation is that investors in 2023 were less likely to convert their crypto holdings into cash, as they anticipated even higher prices—especially since prices in 2023 never surpassed previous all-time highs, unlike in 2021.
Cryptocurrency gains remained relatively steady throughout the year until two consecutive months of decline in August and September. Afterward, gains surged sharply, making the increases in November and December dwarf those of earlier months.
Estimated Cryptocurrency Gains by Country in 2023
In 2023, the United States led by a wide margin in cryptocurrency gains, with an estimated $9.36 billion. The United Kingdom ranked second, with approximately $1.39 billion in crypto gains.
Interestingly, we also observed residents of several upper-middle and lower-middle income countries appearing to achieve outsized gains, particularly in Asia. For example, estimated gains in Vietnam, China, Indonesia, and India all exceeded $1 billion, placing them among the top six countries globally. As noted in our "2023 Geography of Cryptocurrency Report," adoption rates in these income categories—especially lower-middle-income countries—are high, and have shown notable resilience even during recent bear markets. Our gain estimates suggest that many investors in these countries have already benefited from embracing this asset class.
What Lies Ahead in 2024?
So far, the positive trends from 2023 have carried into 2024. With the approval of Bitcoin ETFs and increasing institutional adoption, prominent crypto assets like Bitcoin have reached new all-time highs. If these trends continue, we may see gains more in line with those of 2021. As of March 13, Bitcoin has risen 65.4% in 2024, while ETH has increased by 70.2%.
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