Global cryptocurrency adoption among individual investors has soared over the past year, according to cryptography analyst firm Chainalysis.
Using factors such as peer-to-peer currency trading volume and value received, Chainalysis said global cryptocurrency adoption has increased by about 881 percent in the past 12 months.
The company sees institutional markets as crucial, but aimed to highlight the countries with the highest adoption of cryptocurrency by retail investors. He focused on use cases related to transactions and individual savings rather than trade and speculation. The highest ranked countries are Vietnam, India, Pakistan and Ukraine.
“In emerging markets, many are turning to cryptocurrency to preserve their economies in the face of currency devaluation, send and receive remittances, and conduct business transactions,” Chainalysis said in the report. He added that “adoption in North America, Western Europe and East Asia last year was driven in large part by institutional investments.”
Interest in cryptocurrencies has increased since the start of the pandemic, in part because of the substantial gains from digital tokens like Bitcoin and Ether. The Bloomberg Galaxy Crypto Index has risen about 380% last year. Bitcoin price in India was at Rs. 34.71 lakhs, while the Ethereum price in India was at Rs. 2.34 lakhs from 10am IST on August 19th.
The Chainalysis Global Crypto Adoption Index ranks 154 countries by three key indicators. China and the US fell in the rankings, mainly because the volume of peer-to-peer trade declined. Last year, China was fourth and the US sixth. This year, the US is in eighth and China in 13th.
Chainalysis eliminated a factor it had previously used: the number of deposits per country weighted by the number of Internet users. The company found it skewed the ratings toward countries with comparatively more decentralized finance, or DeFi, users. Instead, it’s creating a DeFi Adoption Index that it says will be available in the coming weeks.
“The increasing transaction volume for centralized services and the explosive growth of DeFi are driving the use of cryptocurrencies in the developed world and countries that have already had substantial adoption, while P2P platforms are driving new adoption in emerging markets,” he said. Chainalysis, adding an important question is whether new approaches will stop these trends.
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