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New data reveals that Asian investors are the driving force behind Bitcoin's recent surge, contributing to 70% of the cryptocurrency's global trading volume. This marks a significant shift in investment patterns, mirroring trends from 2021.
Asian Dominance in Bitcoin Trading Highlights Shift in Investor Sentiment
The data indicates that of the $1.17 trillion worth of Bitcoin traded in February, $791 billion was accounted for by Asian investors, while North American investors lagged significantly behind with $113 billion. This trend has been observed since November, Reuters (via Nasdaq) reported.
Numerous small investors in China, worn down by the sluggish stock market, have been overcome with FOMO. In February, "Bitcoin" searches on the widely used messaging application WeChat increased by twelve.
"I want to buy some Bitcoin at a good price and hold," Mia Wang, a finance industry employee based in China's eastern province of Zhejiang, told Reuters. "It has jumped a lot and is expensive now, but I worry it won't have any correction."
Bitcoin is trading near its all-time high of $69,000, at approximately $65,000, following an astounding 148% increase since early October. The surge was primarily fueled by U.S. regulators' approval of spot Bitcoin exchange-traded funds (ETFs)f. IBIT.O, an iShares Bitcoin trust managed by BlackRock, has benefited significantly from these investment flows.
Additionally, traders have flocked to the most prominent cryptocurrency in the world in anticipation of April's "halving" event, which could reduce supply and increase prices. There are a maximum of 21 million Bitcoins in circulation, of which 19 million tokens have been mined.
The legal status of Bitcoin trading and ownership differs significantly among Asian jurisdictions, with China prohibiting the practice while Japan maintains relatively lax regulations. South Korea bans spot Bitcoin ETFs, but local brokers provide convenient access to Bitcoin futures ETFs.
South Korea's Growing Influence in Bitcoin Markets Amid Global Trading Dynamics
An estimated 10% of the Bitcoin BTC= cash tokens and listed futures markets are dominated by South Korea, according to Hong Song-uk, a cryptocurrency analyst at N.H. Investment & Securities.
The Korea Securities Depository reports that South Koreans have invested $23.4 million in the U.S.-listed 2X Bitcoin Strategy ETF BITX.K this year, up from $25.1 million for the entire year of 2023. Additionally, they allocated $6.89 million to Proshares Bitcoin Strategy ETF BITO.K in February.
"Because trading of Bitcoin ETFs has been banned here, more and more Koreans are buying Bitcoin ETF futures, which is helping with its pop now," said Hong.
The South Korean exchange reported that Bitcoin trading volumes on Upbit nearly tripled to 67,000 coins last week compared to the previous week.
However, research firm Kaiko reports that U.S.-based exchanges such as Coinbase COIN.O, Bitstamp, and Binance, which operate in some Asian markets, hold the largest share of global volumes at 50%.
In the past year, cryptocurrency trading has been decriminalized in Hong Kong, and Bitcoin ATMs and shops catering to small investors and even offshore Chinese financial institutions have been permitted.
Assets under management of the most extensive Bitcoin futures ETF in the city, which CSOP Asset Management manages, have increased by a factor of five over the last five months, reaching over $100 million.
India is a significant cryptocurrency market, with several domestic exchanges operating lawfully. However, most trading activities transpire on offshore platforms, such as Binance and KuCoin, which are exempt from the 1% transaction monitoring tax imposed on domestic operators.
An estimated 350,000 crore rupees worth of cryptocurrency was exchanged between Indians and offshore crypto platforms between July 2022 and July 2023, representing over 90% of the total volume of cryptocurrency trading by Indians, according to the Esya Centre, a local think tank.
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