Chainalysis, a currency analysis agency, recently released a research report stating that North America remains the world's largest cryptocurrency market, with crypto activities accounting for 22.5% of the world's total. After the collapse of FTX in 2022 and the collapse of Silicon Valley Bank in 2023, key factors such as the strengthening of market supervision in the United States, the Federal Reserve's multiple interest rate hikes to deal with inflation, the continued participation of institutional investors, and the increase in safe-haven demand for Bitcoin , allowing U.S. markets to recover in 2024 and drive Bitcoin to new all-time highs.

U.S. Total Cryptocurrency Revenues: $1.3 Trillion, Mostly Institutionally Driven

The report stated that North America received a total of approximately $1.3 trillion worth of cryptocurrencies between July 2023 and June 2024, accounting for approximately 22.5% of global activity. Cryptocurrency activity in the United States is mainly driven by institutional participation, with approximately 70% of transaction volume coming from large transfers of more than $1 million, showing the increasing influence of large American financial institutions in the crypto market.

Traditional financial giants are joining in one after another, and the market is gradually maturing.

The report states that there will be greater convergence between traditional finance (TradFi) and cryptocurrencies in 2024 with the launch of a Bitcoin spot ETF in the United States. Traditional financial giants such as Goldman Sachs, Fidelity and BlackRock have entered the encryption industry, symbolizing that cryptocurrency has entered a more mature stage from an emerging market.

CeFi becomes a bridge for institutional investors to enter the encryption market

Centralized finance (CeFi) platforms such as Coinbase and Gemini have become an important bridge for institutions to enter the cryptocurrency market, providing safe and simple asset management services. For example, BlackRock will cooperate with Coinbase in 2022 to integrate Coinbase's Coinbase Prime function into BlackRock's proprietary investment management platform Aladdin. It can be seen that CeFi has indeed become a bridge for institutional investors to enter the encryption market. It not only provides a convenient entrance for retail investors, but also meets the needs of institutional investors for stable and reliable trading services.

BlackRock successively launches IBIT and Ethereum ETFs, the key to the integration of gold and cryptocurrencies

The Bitcoin Spot ETF (IBIT) launched by BlackRock in January 2024 attracted many institutional investors to join and injected a large amount of liquidity into the Bitcoin market, further driving up the price of Bitcoin. The SEC’s approval of IBIT’s listing could be seen as the start of a bull market that pushed Bitcoin prices past $73,000 to a new high in March, while BlackRock quickly surpassed $20 billion in assets under management just weeks after launching IBIT.

With the launch of BlackRock's Ethereum ETF in July this year, which has also reached a scale of US$1 billion, the launch of Bitcoin and Ethereum ETFs can be regarded as a critical moment for the integration of traditional finance and cryptocurrency.

(BlackRock: The narrative problem of Ethereum ETF still needs to be solved, and it is rare to start with $1 billion)

The launch of the BlackRock Bitcoin Spot ETF (IBIT) has kicked off a bull run. Key factors driving U.S. crypto market leadership: wealth, demographics and innovation

According to the chart, the United States remains the leader in the global cryptocurrency market. Here are several key factors:

  • great wealth

  • Huge population

  • Deep and highly liquid capital markets

  • Support financial technology innovation

  • The U.S. dollar as the main reserve currency of the international financial system

  • favorable investment environment

U.S. crypto market volatility significantly affects global markets

The U.S. cryptocurrency market is more volatile than the global market in terms of growth. The chart below uses Bitcoin, the U.S. market, and the global market as an example:

  • When Bitcoin rises, U.S. markets typically grow more than global markets.

  • In turn, when cryptocurrency prices fall, the decline in U.S. markets is more pronounced than in global markets.

The use of stablecoins slows down and competition in the global market intensifies

While crypto market activity in the U.S. is booming, stablecoin adoption is slowing down amid increased regulation. But regions outside of North America, such as the European Union, have enacted MiCA, and the UAE and Singapore are gradually improving encryption-related regulations, attracting more stablecoin projects. Rapid growth in these regions could threaten the U.S.’s leadership in the crypto market.

The figure below shows the activities of stablecoins on U.S.-regulated exchanges and non-U.S.-regulated exchanges. It can be seen that the role of stablecoins in emerging markets and non-U.S. markets is gradually expanding.

The Canadian market follows the U.S. market

The report shows that although the Canadian market is smaller than the United States, it is still a major player in the North American market, receiving a total of approximately $119 billion in cryptocurrencies between July 2023 and June 2024. As you can see in the chart below, while Canadian markets follow U.S. market trends, they tend to be less volatile, with bull market rallies and retracements during bear markets being milder than in the U.S., while Canada is closely tied to global trends in terms of asset distribution and trading volume.

In recent years, Canada has tightened regulations on custody, leverage, and stablecoins, leading to the withdrawal of large cryptocurrency exchanges such as Gemini and Binance from the market, but this also reflects the gradual maturation of the regulatory framework.

(Gemini decided to withdraw from the Canadian market and close all customer accounts before the end of the year)

However, Canada still has insufficient regulations on stablecoins and DeFi, and major banks are still conservative in their approach to cryptocurrencies, limiting cryptocurrency-related innovation and the availability of banking services. There is potential to play a more significant role in global cryptocurrency adoption in the future if governments step up their support and provide clearer market planning.

To sum up, given the successive participation of traditional financial institutions in the United States, the North American market has become one of the main driving forces of the global cryptocurrency market. In the future, whether the United States can improve its regulatory regulations will be the key to maintaining its leading position in the cryptocurrency market.

 

This article Chainalysis: Financial institutions and Bitcoin ETFs push North America to lead the world, but crypto regulation still needs to be improved first appeared on Chainalysis News ABMedia.

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