© Reuters. FILE PHOTO: Representations of cryptocurrencies in this illustration taken January 24, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
By Jihoon Lee and Jaspreet Kalra
SEOUL/MUMBAI (Reuters) – The runaway economic rebound is being driven by investors in Asia.
Traders from South Korea, China and other Asian countries are responsible for about 70% of bitcoin trading volumes, much like 2021, when bitcoin last hit such dizzying highs, according to data from The Block cryptocurrency exchange.
Asia accounted for $791 billion of the $1.17 trillion in bitcoin traded in February, with North American investors far behind at $113 billion, broadly reflecting a trend seen since November, they show. the data.
In China, FOMO has gripped many small investors frustrated by an anemic stock market. On the popular messaging app WeChat, searches for “bitcoin” increased 12-fold in February.
“I want to buy bitcoins at a good price and hold them,” Mia Wang, a financial industry employee based in eastern China's Zhejiang province, told Reuters. “It has increased a lot and is now expensive, but I am worried that there will be no correction.”
Bitcoin is trading at around $65,000, close to its record high of $69,000, after a stunning 148% rise since early October, driven mainly by US regulators approving spot bitcoin exchange-traded funds (ETFs). BlackRock's (NYSE:) iShares bitcoin trust has been a major beneficiary of such investment flows.
Traders have also invested in the world's largest cryptocurrency ahead of the April “halving” event, which could reduce supply and drive prices higher. The supply of bitcoins is limited to 21 million, of which 19 million tokens have already been mined.
The legality of trading and holding bitcoins varies across Asian jurisdictions, from Japan, which has comparatively liberal regulations, to China, where there is a ban. Spot bitcoin ETFs are banned in South Korea, but local brokers offer easy access to bitcoin futures ETFs.
KOREA GETS BIG WITH BITCOIN
South Korea controls a 10% share of bitcoin cash tokens and listed futures markets, estimates Hong Song-uk, cryptocurrency analyst at NH Investment & Securities.
South Koreans have made a net investment of $23.4 million in the U.S.-listed 2X Bitcoin Strategy ETF this year, compared with $25.1 million in all of 2023, according to the Korea Securities Depository. In February, they also invested $6.89 million in the Proshares Bitcoin Strategy ETF.
“Because bitcoin ETF trading has been banned here, more and more Koreans are buying bitcoin ETF futures, which is contributing to its current popularity,” Hong said.
Bitcoin trading volumes on Upbit roughly tripled to 67,000 coins last week compared to the previous week, the South Korean exchange said.
However, according to research firm Kaiko, US-based exchanges such as Coinbase (NASDAQ 🙂, Bitstamp and Binance, which operate in some Asian markets, still have the largest share of global volumes at 50%.
Hong Kong has decriminalized cryptocurrency trading over the past year, while allowing bitcoin ATMs and stores to serve small investors and even Chinese offshore financial institutions.
The city's largest bitcoin futures ETF, managed by CSOP Asset Management, has seen its assets under management quintuple in the past five months to more than $100 million.
There is also strong interest in India, where several local crypto exchanges operate legally, but more trading takes place on offshore exchanges such as Binance and KuCoin, which do not charge the 1% transaction monitoring tax that local operators do.
Between July 2022 and July 2023, Indians traded cryptocurrencies worth Rs 350,000 crore through offshore crypto platforms, accounting for more than 90% of Indians' total cryptocurrency trading volume, according to Esya Center estimates. , a local think tank.
