According to a research report recently released by the cryptocurrency analysis firm Chainalysis, North America remains the world's largest cryptocurrency market, accounting for 22.5% of global crypto activity. After the FTX collapse in 2022 and the Silicon Valley Bank failure in 2023, the US market is expected to recover in 2024 and drive Bit to new historical highs, due to factors such as increased market regulation by the US, multiple interest rate hikes by the Federal Reserve to combat inflation, the gradual entry of institutional investors, and increased demand for Bit as a hedge.
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ToggleThe US received 1.3 trillion in crypto assets, mainly driven by institutions
The report states that during the period from July 2023 to June 2024, North America received a total of approximately $1.3 trillion in crypto assets, accounting for about 22.5% of global activity. The crypto activity in the US is mainly driven by institutional participation, with about 70% of the transaction volume coming from transfers of $1 million or more, indicating that the influence of large US financial institutions in the crypto market is growing.
Traditional financial giants are joining in, and the market is gradually maturing
The report states that in 2024, with the launch of a Bit spot ETF in the US, the integration between traditional finance (TradFi) and cryptocurrencies has deepened. Traditional financial giants such as Goldman Sachs, Fidelity, and BlackRock have entered the crypto industry, symbolizing that cryptocurrencies have entered a more mature stage from an emerging market.
CeFi becomes a bridge for institutional investors to enter the crypto market
Centralized finance (CeFi) platforms like Coinbase and Gemini have become an important bridge for institutions to enter the cryptocurrency market, providing secure and simple asset management services. For example, in 2022, BlackRock collaborated with Coinbase to integrate Coinbase's Coinbase Prime functionality into BlackRock's proprietary investment management platform Aladdin, demonstrating that CeFi has indeed become a bridge for institutional investors to enter the crypto market. CeFi not only provides a convenient entry point for retail investors, but also meets the demand of institutional investors for stable and reliable trading services.
BlackRock Launches IBIT and Ethereum ETF, a Key Milestone in the Convergence of Finance and Crypto
In January 2024, BlackRock launched its Bitcoin spot ETF (IBIT), which attracted a large number of institutional investors and injected significant liquidity into the Bitcoin market, further driving the rise in Bitcoin prices. The SEC's approval of the IBIT listing can be seen as the beginning of a bull market, pushing Bitcoin prices to break through $73,000 and hit a new high in March. Within a few weeks of launching IBIT, BlackRock's assets under management quickly exceeded $20 billion.
With the launch of the Ethereum ETF by BlackRock this July, the initial scale reached $1 billion. The launch of Bitcoin and Ethereum ETFs can be seen as a critical moment in the convergence of traditional finance and cryptocurrencies.
Key Factors Driving the US Crypto Market Leadership: Wealth, Population, and Innovation
According to the chart, the United States remains the global leader in the cryptocurrency market. Here are a few key factors:
- Massive wealth
- Large population
- Deep and highly liquid capital markets
- Support for financial technology innovation
- The US dollar as the primary reserve currency in the international financial system
- Favorable investment environment
Volatility in the US Crypto Market Significantly Impacts the Global Market
The US cryptocurrency market has greater volatility in its growth compared to the global market, as shown in the chart below using Bitcoin, the US market, and the global market as examples:
- When Bitcoin prices rise, the growth rate of the US market is usually greater than the global market.
- Conversely, when cryptocurrency prices fall, the decline in the US market is also more pronounced than the global market.
Stablecoin Usage Slows, Global Market Competition Intensifies
While the US crypto market activity is thriving, stablecoin usage has a slowing trend under increased regulation. However, regions outside North America, such as the European Union, which has already enacted MiCA, and the UAE and Singapore with their evolving crypto-related regulations, have attracted more stablecoin projects. The rapid growth in these regions may impact the US's leading position in the crypto market.
The chart below shows the activity of stablecoins on US-regulated exchanges and non-US regulated exchanges, indicating the increasing role of stablecoins in emerging markets and non-US markets.
The Canadian Market Closely Follows the US Market
The report shows that while the Canadian market is smaller than the US, it is still a major participant in the North American market, receiving around $119 billion in cryptocurrencies from July 2023 to June 2024. The chart shows that although the Canadian market closely follows the US market trend, its volatility is often lower, with more moderate gains during bull markets and smaller drawdowns during bear markets. Canada's asset distribution and trading volume are closely aligned with global trends.
In recent years, Canada has strengthened its regulation of custody, leverage, and stablecoins, leading to the exit of large cryptocurrency exchanges like Gemini and Binance from the market, but this also reflects the gradual maturation of the regulatory framework.
(Gemini Decides to Exit the Canadian Market, Closing All Customer Accounts by the End of the Year)
However, Canada still lacks sufficient regulation of stablecoins and DeFi, and the major banks remain conservative towards cryptocurrencies, limiting the availability of cryptocurrency-related innovations and banking services. If the government provides stronger support and clearer market planning, Canada has the potential to play a more important role in the global adoption of cryptocurrencies.
In summary, with the increasing participation of traditional financial institutions in the US, the North American market has become one of the primary drivers of the global cryptocurrency market. Going forward, whether the US can improve its regulatory framework will be the key to maintaining its leading position in the cryptocurrency market.
