The cryptocurrency market has become extremely diversified over the past decade. With trading activity taking place in over eight different regions of the world, the distribution in terms of transactions is pretty significant.
Amidst all the trading regions, East Asia is the world’s largest cryptocurrency trading market, as the region as accounted for about 31% of the total volumes in the past 12 months.
According to Chainalysis’ 2020 Geography of Cryptocurrency Report, East-Asian digital asset addresses have received $107 billion worth of cryptocurrencies in the past year which is a whopping 77% more than the entire North-Western Europe region. The region is also responsible for the largest mining activity, with China controlling 65% of the global hashrate.
However, just because East-Asia has the highest trading activity, did not directly mean that Bitcoin was the most popular asset here out of all the regions.
East-Asia Traders heavily focused on Altcoin and Stablecoin Trading
The report’s data indicated that over the past year, professional traders in East-Asia have indulged quite a bit in speculative trading, which included the likes of Altcoins and Stablecoins. While accredited traders in North America traded heavily with Bitcoin(Over 77% of volume), in East-Asia only 51% of the on-chain volume was transacted under Bitcoin.
The report added,
“Much of the remaining volume is made up of stablecoins — primarily Tether but the chart above also underscores the role altcoins play in the East Asia market. Altcoins, by which we mean all non-stablecoin alternatives to Bitcoin, makeup 16% of trading volume for Eastern Asia addresses, more than any other region.”
Why are Stablecoins becoming so popular in East-Asia?
One of the major factors for stable assets such as Tether to become widely popular in China(76% of the trading volume is East-Asia which comes from China) is the fact that Tether represents the closest association to a U.S dollar. By using Tether as a fiat stand-in instead of, say, Bitcoin, traders can lock in gains without off-ramping into fiat by simply converting other currencies into Tether and leaving the Tether in their wallet or exchange account.
On the other hand, Bitcoin configures too much volatility at present, as prices keep moving constantly in the charts. Another prime reason could be the fact that the Chinese government does not really prefer Bitcoin.
In the past, Xi Jinping, President of China has been supportive of digital payments, as a Yuan-backed CBDC is undergoing development but a decentralized based asset such as Bitcoin has never received a lot of appreciation.
Recently, Bitcoin exchanges were also getting shut down in Beijing and Shanghai, so it can be assumed that traders are more comfortable to trade with assets that fall under the kind blanket of the ruling party. Decentralized assets are still frowned upon in China that’s why a centralized form in Tether might be more favorable.