According to the "Chainalysis" report, East Asia is now the sixth largest cryptocurrency economy in the world, with its cryptocurrency on-chain transfer value (Transaction Value) accounting for 8.9% of the global share. Between July 2023 and June 2024, East Asia received a total of more than $400 billion in on-chain value; during this period, the total cryptocurrency trading volume in East Asia also remained stable without significant fluctuations.

Source: Chainalysis East Asia’s on-chain transfer share accounts for 8.9% of the world’s

Differences in preferences between professional investors and institutional investors

Centralized exchanges (CEX) have always been the most popular service category in East Asia, accounting for 64.7% of the value transfer share in the region. Most of these transfers are initiated by institutional and professional investors. It is worth noting that "Chainalysis" further pointed out that professional investors prefer to use CEX; while institutional investors use more decentralized exchanges (DEX) and other DeFi services. The difference is primarily that DEXs offer more arbitrage opportunities, allowing them to continue to profit despite market inefficiencies.

Source: Chainalysis Trading habits in various regions

South Korea: East Asia’s largest cryptocurrency market

Data shows that South Korea is the largest cryptocurrency market in East Asia, receiving a total of approximately $130 billion in on-chain value during the report’s study period. Since the first quarter of 2023, South Korea has continued to grow in the value of cryptocurrency transfers in East Asia. According to Chainalysis interviews with executives at prominent South Korean cryptocurrency exchanges, this growth is primarily driven by corporate adoption:

“Investors’ distrust of the traditional financial system has prompted them to seek cryptocurrencies as alternative assets. As large companies such as Samsung adopt blockchain technology to improve transparency and operational efficiency, the public’s awareness of cryptocurrencies will also increase. "

Source: Chainalysis Value transfer share distribution in East Asia

On the other hand, the Korean won ($KRW) is the mainstream fiat currency pair for altcoin trading in South Korea, which also creates obvious arbitrage opportunities between regional exchanges and global exchanges. An exchange executive said that due to the squeeze of demand from South Korean investors and arbitrage by institutions, "the price of the South Korean cryptocurrency market is higher than that of the global market", the so-called "Kimchi Premium" often exists in South Korea. Premium)". So during the time Bitcoin hit another ATH in March 2024, the pickle premium also surged.

Source: CryptoQuant South Korea’s Bitcoin Kimchi Premium

Hong Kong: Regulatory framework promotes institutional adoption

As another cryptocurrency center in East Asia, Hong Kong also achieved an annual growth of 85.6% between 2023 and 2024, making it the fastest growing cryptocurrency market in East Asia. Despite China’s changing attitude towards cryptocurrencies and its numerous regulatory crackdowns, Hong Kong has gradually become a safe haven for institutional investors due to its unique legal and regulatory framework.

Picture source: Chainalysis Market growth in the East Asia low zone in the past two years

In 2024, the Hong Kong Securities and Futures Commission approved Bitcoin and Ethereum spot ETFs, further boosting the inflow of institutional funds. Kevin Cui, CEO of cryptocurrency exchange OSL, noted:
"Spot ETFs not only provide a legal trading channel for digital asset investment, but also arouse market interest in holding cryptocurrencies such as Bitcoin and Ethereum, reflecting the huge transformation caused by the participation of traditional financial instruments in digital assets."

China: Cryptocurrencies become a means of preserving asset value

China has severely restricted cryptocurrency trading since 2021, but investors have turned to over-the-counter (OTC) and P2P platforms to bypass government restrictions. The rapid growth of these platforms, especially after mid-2023, indicates the decreasing demand from Chinese investors for fund transfer and asset preservation. As the real estate market becomes unstable, wealthy Chinese are turning to cryptocurrencies and luxury goods to protect the value of their assets. Ben Charoenwon, associate professor at INSEAD Asia Campus, said cryptocurrencies are becoming a tool to hedge against market and government control.

Source: Chainalysis The growth of China’s OTC platform

The future of cryptocurrencies in East Asia

Overall, the cryptocurrency markets in South Korea and Hong Kong have shown strong growth trends, driven by high participation from institutional investors and supportive regulatory policies. The South Korean market, based on its strong IT infrastructure and active trading demand, has steadily promoted the adoption of cryptocurrencies in the region; and now with the approval of spot ETFs, Hong Kong’s regulatory environment has also provided more opportunities for institutional investors. market opportunities; and the booming development of China's OTC market has announced to the world that government regulatory crackdowns cannot extinguish the free atmosphere that Bitcoin exudes. As the adoption of cryptocurrencies increases day by day, East Asia will become an important hub for the global cryptocurrency market.