Three out of four people who have bought bitcoin have lost money, according to a study published on Monday as the cryptocurrency sector reels from the collapse of a major exchange that has sapped confidence.

AFP reports economists at the Bank of International Settlements, an institution widely considered as the central bank of central banks, analysed data on investors in cryptocurrencies in 95 countries between 2015 and 2022 and gave this verdict.

“Overall, back of the envelope calculations suggest that around three-quarters of users have lost money on their bitcoin investments,” they said in their study.

During the period studied, the price of bitcoin rose from $250 in August 2015 to peak at nearly $69,000 in November 2021. It is now trading at around $16,500.

Coindesk in its latest report on the issue says total crypto market capitalization slid to $900 billion from over $1 trillion on Wednesday as traders reacted to speculations around prominent exchange FTX’s liquidity issues.

Over $700 million in long positions, or bets for higher prices, was reportedly liquidated in just one day as traders were caught on the wrong footing.

The Bank of International Settlements’ study also shows the number of people using smartphone apps allowing one to purchase and sell cryptocurrencies rose from 119,000 to 32.5 million during the same period.

“Our analysis has shown that, around the world, bitcoin price increases have been tied to greater entry by retail investors,” the researchers wrote.

Moreover, they said they found that “as prices were rising and smaller users were buying bitcoin, the largest holders (the so-called ‘whales’ or ‘humpbacks’) were selling –- making a return at the smaller users’ expense.”

The researchers did not have direct data on the gains or losses of individual investors. However, they were able to extrapolate based on the price of bitcoin when new investors began using cryptocurrency trading apps and the approximately $20,000 it was worth last month.

The study also found that the biggest segment of new cryptocurrency investors, at roughly 40 per cent, were men under 35, and who are commonly identified as the most “risk-seeking” segment of the population.

Researchers found most cryptocurrency investors saw it as a speculative investment and that young men tended to be more active in trading in the months after a big rise in the bitcoin price.

They said the jump in investors after price increases should raise concerns whether more consumer protection is needed.

FTX came under scrutiny following a CoinDesk report last week that found the balance sheet of Alameda Research, a crypto trading unit owned by Sam Bankman-Fried, who also owns FTX, was full of FTX’s native FTT tokens. This meant that Alameda rested on a foundation largely made up of a coin that a sister company invented, not an independent asset like a fiat currency or another crypto.

The report sparked rumours of FTX becoming possibly insolvent, which in turn led to industry players selling FTX-linked coins to protect their own downside.

Rival Binance, which held over $500 million of FTT on its books, started to offload its holdings – which culminated in a 24-hour-long drama that ended with Binance signing an intent to acquire FTX, which is now considered by many to be insolvent.

Such market dynamics spooked crypto markets as traders reacted to possible contagion risks. FTT prices slid 70% to reach levels previously seen in mid-2021.