Why most retail loses in crypto and why this is not an accident:
Crypto markets love simple slogans. “We are early.” “1000x.”
None of these survive contact with data.
If you want to understand retail outcomes in crypto, you have to stop asking emotional questions and start asking structural ones. Who enters when. Through which rails. Under which incentives. And against whom.
When you do that, the picture becomes uncomfortable, but very clear.
🔺 The hardest dataset we have comes from the Bank for International Settlements:
The BIS is not a crypto influencer and not a crypto hater. It is a conservative, data driven institution that studies financial behaviour at scale. That makes its findings particularly hard to dismiss.
In a large cross country study published in 2022 and revised in 2023, BIS researchers linked crypto exchange app downloads to Bitcoin price levels at the time of entry. They then simulated a simple, transparent behaviour pattern that closely matches real retail behaviour: a new user invests 100 USD in the month of their first app download and continues investing 100 USD every month afterwards.
The result is brutal.
81% of users would have lost money.
The median investor would have lost 48% of their total 900 USD invested.
It is a cohort based analysis of how retail actually enters markets. Late. Momentum driven. After price appreciation.
The BIS is explicit about the distribution. A small minority captures large gains. The majority loses. This is a mathematical consequence of reflexive entry timing.
🔺 Crashes are where losses concentrate, not where they start
In a follow up bulletin analysing the Terra Luna collapse and the FTX bankruptcy, the BIS shows something even more important.
Losses are not evenly distributed over time. They cluster during trust breaks.
After the November 2021 peak, crypto valuations collapsed through 2022. Over 1.8 trillion USD in market value disappeared. Around 450 billion USD evaporated during the Terra Luna collapse in May 2022. Roughly 200 billion USD vanished after the FTX bankruptcy in November 2022.
During these episodes, the marginal buyer was small and late. The marginal seller was large and early. The BIS concludes that in nearly all economies in their sample, a majority of retail investors likely lost money on their Bitcoin investment. The median loss by December 2022 was 431 USD, almost half of the total invested amount.
This is the core misunderstanding of “volatility”. Crypto risk is not symmetric up and down movement. It is discontinuity risk. When the system fails, liquidity and trust disappear together. Retail is structurally exposed at that moment.
🔺 Profit snapshots do not mean retail is winning:
Crypto media loves metrics like “percent of supply in profit”. They sound optimistic and objective.
According to Glassnode, Bitcoin Percent Supply in Profit stood at roughly 67.3% in December 2025. That means that about two thirds of Bitcoin supply last moved at prices below the current price.
This metric is real and useful. But it is widely misunderstood.
It does not mean two thirds of people are winning. Supply is concentrated. Early holders control large portions. One entity can control many addresses. And the metric measures unrealised price based profit, not realised household outcomes.
It is entirely possible, and historically common, for most supply to be in profit while most retail participants are not.
🔺 Retail does not interact with crypto the way the ideology claims
Decentralisation is the narrative. Centralisation is the behaviour.
According to the Financial Conduct Authority, 73% of UK cryptoasset users in 2025 obtained their crypto through centralised exchanges. This share increased compared to 2024. The research was conducted with thousands of respondents between August and September 2025.
This matters because execution venue shapes outcomes.
Centralised platforms introduce fee extraction, leverage access, funding costs, liquidation mechanics, custody risk and governance risk. Retail is not just exposed to price movements. Retail is exposed to platform design.
🔺 2025 Memecoins show the retail loss mechanism in its purest form:
If you want to understand retail losses without ideology, look at memecoins.
A 2025 academic study of Pumpfun on Solana shows that the platform accounted for up to 71.1% of all tokens minted on Solana and between 40% and 67.4% of decentralised exchange transactions during late 2024.
Again: 71.1% on Solana were Pumpfun tokens.
Then comes the number that matters.
Fewer than 1% of tokens survived a few days.
This is about base rates. If fewer than 1% of instruments survive long enough to reach meaningful liquidity, the default outcome for participants is loss. The market is structurally built around churn, asymmetric information and exit constraints.
Daily active users on the platform surged from around 60000 to peaks near 260000. Mass retail adoption focused on the segment with the lowest survivorship.
🔺 Hype, lack of knowledge and shills accelerate retail losses:
Beyond structure, there is a behavioural multiplier that consistently worsens outcomes: hype combined with ignorance and incentivised promotion.
Retail information intake in crypto is dominated by short form content, anonymous accounts and financial incentives that reward engagement, not accuracy.
Shills are structurally paid to maximise inflows, not long term outcomes. The earlier the promoter, the lower their risk. The later the buyer, the higher theirs.
Most retail participants do not understand basic mechanics such as liquidity depth, unlock schedules, vesting cliffs, dilution, MEV, or counterparty risk. They respond to narratives, price momentum and social proof. This creates feedback loops where hype replaces analysis and conviction replaces risk management.
In such an environment, misinformation does not need to be malicious to be destructive. Even optimistic ignorance is enough. When hype peaks, knowledge gaps peak with it. That is why retail entry clusters near tops and why losses are socially synchronised.
🔺 Trading is negative sum for the crowd:
Even without memecoins, frequent trading creates a mathematical headwind.
Before costs, trading is approximately zero sum across participants, weighted by size. After costs, it becomes negative sum for the crowd. Fees, spreads, slippage, funding rates, liquidation penalties and adverse selection all matter.
In decentralised environments, add MEV and transaction ordering. These are not moral failures. They are mechanical transfer functions.
Without a repeatable edge that survives all frictions, the expected value of frequent retail trading drifts below zero.
🔺 The uncomfortable conclusion:
The most honest summary of retail outcomes in crypto today is this:
Most retail participants lose money, not because they are irrational, but because they enter late, operate with incomplete knowledge, trade in hostile structures, and bear the brunt of system failures amplified by hype and shilling. A small insider minority wins big. The majority subsidises that outcome.
This text is anti illusion.
And it explains why self custody, decentralisation, transparency and structural education are not marketing slogans. They are the only tools retail has to reduce asymmetry in a system that otherwise feeds on it.
That is the part of crypto that still matters.
This is $MASTR.
