Crypto: The Rich Got Richer, Retail Investors Paid the Price
A decade of cryptocurrency has created an extraordinary illusion: everyone won
Personal opinion and independent analysis. This article is not investment advice.
There is a story about cryptocurrency that has been repeated so many times that it has almost become conventional wisdom.
Bitcoin was created. Early adopters became millionaires. The technology revolutionised finance. Those who believed early were rewarded. Those who stayed invested became wealthy.
There is some truth in this story.
But there is also a much larger part of the story that is rarely discussed:
the people who made the spectacular returns are not necessarily representative of the people who entered the market later.
And once we look at cryptocurrency from the perspective of the average retail investor rather than from the perspective of Bitcoin’s most successful holders, the picture becomes considerably less glamorous.
2016: the beginning of the modern crypto wealth cycle
In 2016 Bitcoin was still a relatively marginal financial asset.
The price was measured in hundreds of dollars rather than tens of thousands. Cryptocurrency was largely the territory of technology enthusiasts, libertarians, early adopters and highly speculative investors.
Bitcoin also dominated the market: academic research shows that it represented roughly 90% of cryptocurrency market share in January 2016. (Springer)
The subsequent decade changed everything.
Bitcoin experienced enormous appreciation, followed by spectacular crashes in 2017–18, 2020–21 and 2022, before entering another institutionalisation phase following the approval of spot Bitcoin ETFs in 2024.
Looking only at the price chart, the conclusion appears obvious:
Crypto was an extraordinary investment.
But a price chart is not a distribution of investor returns.