According to blockchain and crypto research firm Chainalysis, East Asia is the world’s largest cryptocurrency market with 31% of all cryptocurrency transactions in the past 12 months happening in this region, and the reason for the growth and sustainability of the market can be attributed to professional traders and the strengthening presence of stablecoins. With Bitcoin mining stronghold China in the mix, it comes as to no surprise that East Asia is a powerhouse in driving the cryptocurrency market forward.
Liquidity in the retail market and an increased number of professional traders engaging in speculative trading across a wider variety of digital assets have boosted the cryptocurrency market in the East Asia region. This is opposed to countries where the retail market is not as robust or where professional traders have bought solely into Bitcoin as a long term investment.
“The liquidity of the East Asia market also makes it the closest we have to a self-sustaining market. 44% of transactions by volume involving an East Asia-based address are counter-partied with another East Asia-based address, compared to just 22% for Western Europe, the next closest region. The liquidity and large trading population of the East Asia market makes it a key trading partner for other regions’ cryptocurrency economies,” the report reads.
Moreover, as most of the world is only now shifting to become less dependent on physical cash, China, Japan and South Korea are no stranger to digital payments and having their citizens adopt an electronic currency (stablecoins or other digital assets) is a much easier task than it is in countries that are still new to non-cash payments. Retail market participants in East Asia have adopted digital assets faster than other regions in the world and trade much more frequently than those in Europe, for example.
Chainalysis has also highlighted the importance of establishing crypto-related regulations early as clarity helps businesses in the sector to develop their products and services without fear that sudden tightening of regulations will affect their operations significantly.
Tether (USDT) dominates the stablecoin market in East Asia and has seen increased usage in the region as well, with 33% of value transacted on-chain belonging to USDT. This trend can be attributed to USDT being not only a bridge between the pure crypto and pure fiat worlds, but also a bridge between Chinese crypto traders and global exchanges. Following China’s ban on direct cryptocurrency exchanges in the country, traders who are unable to directly purchase crypto with the renminbi will have to exchange that for USDT.
“Tether tokens are neither a panacea nor a replacement for fiat. Instead use cases have organically grown where traditional financial assets have been found to be lacking. Tether tokens may not be best suited for buying coffees, but the fast settlement, deep liquidity, low fees and stable price associated with tethers have created unique opportunities for crypto traders, remittances, lending products and safe havens for people in jurisdictions with less stable fiat currencies,” said Paolo Ardoino, CTO of Tether, as quoted in the report.
Other regions, however, are slowly catching up. The African continent as a whole has been touted as the newest emerging market for cryptocurrency, and the same goes for the Latin America market. Due to a variety of reasons, such as a weak national fiat currency, massive inflation rates or just a lack of access to traditional banks and financial services, both markets are seeing precipitous growth in terms of crypto adoption. In Africa specifically, more individuals have mobile phones than they do bank accounts, and thus, “mobile money” has become valuable to them and crypto is a store of value that can be easily transferred for use.
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