In 2024, global cryptocurrency activity will continue to grow, with developing economies leading in crypto ownership.
Adoption of the new asset class is increasing worldwide, driven in part by the introduction of bitcoin and ether exchange-traded funds (ETFs) in the US, which has boosted adoption, particularly in institutional transfers and high-income regions.
However, regulatory concerns remain a key obstacle, particularly in the US and the UK, although Europe is taking steps to address these challenges with the regulation of markets in crypto-assets (MiCA).
Global crypto activity is on the rise
Global crypto activity has continued to rise this year despite market volatility. Between Q4 2023 and Q1 2024, the total value of global crypto activity rose significantly, reaching higher levels than that of 2021 during the crypto bull market, data from Chainalysis shows.
The report says that while growth in crypto adoption was primarily driven by lower-middle-income countries in 2023, this year saw growth across countries of all income levels, supported by positive developments.
Chainalysis’ findings mirror those of a new Triple A Technologies research. According to the “State of Cryptocurrency Ownership Worldwide in 2024″ report, the global user base of digital currencies reached 562 million people this year, an increase of 34% from 420 million in 2023. This figure indicates that 6.8% of the world’s population are now crypto owners, with crypto ownership growing at a compound annual growth rate (CAGR) of 99% between 2018 and 2023.
Central and South Asia and Oceania dominate crypto adoption
This year, cryptocurrency adoption was strongest in Central and South Asia, along with Oceania (CSAO). The region dominates Chainalysis’ “2024 Global Crypto Adoption Index”, with seven of the top 20 countries located in CSAO. These countries are India (#1), Indonesia (#3), Vietnam (#5), the Philippines (#8) Pakistan (#9), Thailand (#16) and Cambodia (#17), all of which demonstrated strong activity in both cryptocurrency trading and decentralized finance (DeFi) between 2023 and 2024.
The Global Crypto Adoption Index is based on four sub-indices, each measuring different aspects of cryptocurrency usage. It ranks a total of 151 countries based on factors such as transaction volume, population size and purchasing power.
Developing economies lead crypto ownership
Developing economies currently lead in crypto adoption, with the United Arab Emirates (UAE), Singapore (24.4%), Turkey (19.3%), Argentina (18.9%), Thailand (17.6%) and Brazil (17.5%) showing the high levels of crypto ownership, according to Gemini’s 2024 “Global State of Crypto” report.
The high penetration of cryptocurrencies in developing economies is often due to limited access to traditional banking, high remittance costs, inflation and currency instability. These digital assets offer an attractive alternative for saving, transferring money and accessing financial services, especially in regions with poor financial infrastructure. In addition, the younger, tech-savvy population in these countries is more open to adopting new digital solutions.
ETF brings growth through accessibility
The launch of spot bitcoin and ether ETFs in the US in January and July 2024, respectively, was one of the key drivers of increased crypto adoption this year. According to the Chainalysis report, the development marked a significant milestone for the broader crypto industry, spurring significant growth in crypto activity across all regions, particularly in institutional-sized transfers and in higher-income regions such as North America and West -Europe.
In the US, 37% of cryptocurrency owners surveyed by Gemini in 2024 reported holding their crypto through an ETF, underscoring the role of these instruments in driving growth within the sector. Notably, 13% of respondents said they owned crypto exclusively through an ETF, indicating that many investors entered the market via ETFs when they launched this year.
The launch of spot bitcoin ETFs earlier in 2024 generated considerable enthusiasm. Within the first month of trading, the daily trading volume reached nearly US$8 billion, which was an increase of 63.8% from the previous peak of US$4.7 billion on January 11, 2024, the first day of trading, and the strong interest from investors in this new asset class.
Investors remain bullish on crypto
This year, consumer attitudes around crypto remained positive among owners and previous owners. According to the Gemini survey, 57% of current crypto owners feel comfortable making crypto a significant part of their investment portfolios. Furthermore, 27% of previous crypto owners expressed similar sentiments, indicating that many may re-enter the market.
Institutional investors are also showing increasing interest in digital assets. A study by EY-Parthenon found that 94% of the 277 institutional investor decision makers surveyed believe in the long-term value of blockchain and digital assets, with 79% seeing them as essential for portfolio diversification.
Additionally, 38% of these respondents said they have already committed between 1%-5% of funds to digital assets or crypto-related investments, and in the case of family offices, nearly half are in that allocation range. Traditional hedge funds seek even more aggressive profit than their peers to digital assets, with 22% allocating more than 5% of funds.
Regulatory concerns as a barrier
Despite increased crypto activity and increasing adoption among both retail and institutional investors, regulatory concerns remain a significant barrier.
In 2024, a higher percentage of respondents in the US, UK and Singapore cited regulatory uncertainty as a key obstacle to investing in cryptocurrencies compared to 2022, according to the Gemini survey.
These results are consistent with the findings of the EY-Parthenon survey which found that while half of companies are interested in investing in signed assets, 28% do not intend to invest until 2026 or later, and 30% are waiting for regulatory clarification before moving. forward.
The European Union (EU) took a major step to address these concerns and approved the MiCA Regulation in June 2023. MiCA, which will apply from 30 December 2024, will introduce uniform market rules for crypto-assets across the EU, providing a more robust and transparent legal framework that is expected to promote further crypto adoption and investment in Europe.
Featured image credit: edited from freepik
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