June 10, 2021, 11:52 a.m. EDT

U.S. investors blew away the rest of the world with bitcoin gains in 2020. Here’s one reason why.

By Barbara Kollmeyer

Bitcoin has taken investors on a roller-coaster ride this year, but powerful gains in 2020 appeared to have rewarded a lot of investors — notably in the U.S.

Data from blockchain analytic group Chainalysis reveals that U.S. investors reaped an estimated $4.1 billion in realized gains on bitcoin (COINDESK:BTCUSD) in 2020. Those investors beat rivals in other countries by miles, with only China coming anywhere close at $1.1 billion.

Up roughly 32% so far in 2021, bitcoin surged nearly 300% in 2020 — the best gain for the young alternative asset since an eye-popping rally of 1300% in 2017. In a blog post laying out the investment data, analysts at Chainalysis offered up one explanation as to why U.S. investors streaked ahead.

Most investors across the globe saw the biggest gains toward the end of the year, which makes sense as bitcoin prices surged in mid-October and accelerated into mid-December. Chainalysis has previously determined that long-term investors sold their cryptos to newer investors as process rose.

“However, the steepness of the U.S. realized gains curve during this time suggests American investors sold at higher prices, while those in other countries held more,” they said.

Of course, those bitcoin earnings pale in comparison to what investors made on stocks in the pandemic year. According to Federal Reserve data , U.S. investors made roughly $6 trillion on direct and indirect holdings of corporate equity in 2020, which included a dismal first quarter.

Read: These two bitcoin bear market indicators may tell investors when cryptos will bounce back, says J.P. Morgan

As for just how they calculated bitcoin riches geographically, the Chainalysis team rightly points out how tough that was, given the decentralized nature of cryptocurrencies. “It’s impossible to know for sure where the parties of any individual transaction are located,” said the team, which provided an estimate using transaction data from the services the company tracks.

First they measured on-chain flows — transactions that occur on the blockchain — and approximated “total U.S. dollar gains made on bitcoin by measuring differences in the assets price when it was withdrawn from the platform exchange, against when it was received.

“We then distribute those gains (or losses) by country based on the share of web traffic each country accounts for on each exchange’s website,” said the team. “That analysis gives us a reasonable estimate for the realized gains bitcoin investors in each country earned in 2020, though it doesn’t account for gains on assets that have yet to be withdrawn from an exchange.”

As for the rest of the world, Chainalysis said the lack of big investor gains in China was somewhat surprising as the country has historically had the biggest volumes of raw crypto transactions, according to its Global Crypto Adoption Index . But U.S.-geared exchanges also saw big inflows last year, which appeared to tilt toward the end of it.

One insight gained by the analysis was the discovery that many countries “appear to be punching above their weight in bitcoin investment compared with their rankings in traditional economic metrics.” For example, Vietnam’s gross domestic product is ranked 53rd globally, but it’s 10th in Chainalysis’s cryptocurrency adoption rankings. That was a phenomenon seen elsewhere as well, such as Spain, Turkey and the Czech Republic, for example.

The opposite has been seen with countries such as India, which has the fifth largest economy in the world but ranked 18th in terms of bitcoin investment gains last year. However, India is also among those countries were governments are less friendly to cryptocurrencies.

One country to keep an eye as far as adoption of cryptocurrencies is El Salvador, which doesn’t appear on Chainalysis’s rankings. The country’s legislators on Tuesday voted to make bitcoin legal tender .

Read: Some bulls think El Salvador’s bitcoin move ‘could be huge’ for the broader crypto market

And: How farmers are using cow manure to power crypto mining operations

Link to MarketWatch's Slice.