Bitcoin has been a good investment for 3,568 of the 3,978 days of its existence. The days with prices higher than the current one represent 10% of that cryptocurrency’s history.
To know what Bitcoin recent price drop says about it as an investment, it is necessary to see the historical context of its current price. At the time of writing this article, Bitcoin’s price was a little above USD 7,000, well below its price some weeks ago, but it is still above Bitcoin’s all-time closing price, except on 410 days (according to Coinbase historical data).
More than 3,978 days have elapsed since Bitcoin’s launch on January 3rd, 2009. The fact that Bitcoin has been a bad investment on just 410 days seems to be positive since the main cryptocurrency has been a good investment on 3,568 out of 3,978 days. That represents almost 90% of the total days of its existence.
On the other hand, those 410 days of “loss,” when Bitcoin’s price has been above the current price, represents a relatively high amount. Last July, Bitcoin represented a bad investment on only 60 days, but that number has multiplied by 7.
Unfortunately, although Bitcoin has not been a bad investment for almost 90% of its existence, that does not mean that 90% of Bitcoin holders actually register a profit in their wallets. Many more people have bought Bitcoin recently than those who bought in the cryptocurrency’s early years. As the prices were higher than the current one, many of the recent buyers have lost money.
In fact, this has been a particularly cruel year for Bitcoin buyers, since the pioneering cryptocurrency has been a bad investment on 190 days until now. In other words, the Bitcoin closing price has been above the current price approximately 58% of 2019.
The second worst year was 2018 since those who bought Bitcoin on 167 out of the 365 days most likely had losses. It should be noted that 2017 had only 53 “red days” whilst Bitcoin buyers prior to that year have profits today; that is to say, there are no “losses” for those who invested before 2017.
Into de Block, a company dedicated to the analysis of blockchain data, estimates that 56% of Bitcoin holders would have profits if they sold today, 8% would have neither profits nor losses, while the remaining 36% would have losses. That estimate is based on the current price and average purchase price of the cryptocurrencies registered in Bitcoin wallets.
According to Blockchain.com, there are currently more than 43 million wallets. Extrapolating the data from Into the Block, there are 15.7 million wallets that are worth less than the funds registered in them. Of course, there are many inactive and lost wallets, and there are people with multiple wallets, so those who have losses today would correspond to a smaller number.
Although there are millions of people affected by losses, these are not so severe for most of them. On the 410 days “in red”, the median of the difference between the purchase price and the lowest current sale price is slightly higher than USD 2,000.
Of course, to lose that amount the holder would have to have 1 BTC. According to BitInfoCharts, more than 90% of all Bitcoin wallets reflect a balance of 0.1 BTC or less. Given this fact, many of the investors would be facing losses below USD 200. However, those losses would only be realized if they really sold at the current price.
Whether this reality reflects a trend or is only a flash on the radar screen depends on where Bitcoin’s price is heading. If Bitcoin’s price resurfaced above USD 8,000, the number of days in red would be reduced to 300. If a bullish momentum brought it above USD 10,000, the days in red would be reduced to about 150.
By Willmen Blanco