East Asia's Crypto Market Has The Highest Level Of Altcoin Investment Globally

East Asia is the world's largest cryptocurrency market with 31% of all crypto transacted over the past year coming from the region and it also touts the highest level of altcoin investment of any other area, a recent report from Chainanalysis reveals. 

The region reports strong crypto investments from both the institutional and retail markets. Despite high retail interest relative to other locations globally, professional traders still dominate the market with about 90% of all volume transferred by East Asia being a professional-sized trade exceeding $10,000 worth of crypto. Notably, traders in East Asia place a heavier emphasis on carrying a diverse portfolio of cryptocurrencies, while counterparts in North American and Western European — the two second-largest crypto markets — stick to investing in Bitcoin and holding for longer periods of time. 

Eastern Asian traders hold just over half their share of value in Bitcoin and dedicate the rest to altcoins and stablecoins. U.S. dollar pegged stablecoin has proved useful in countries like China where citizens could use the currency to evade restrictions on how much capital they are allowed to move outside of the country. Last year, over $50 billion worth of cryptocurrency was transferred out of the nation. 

Altcoins are also an important category in East Asia with 16% of the share of value by cryptocurrency by trade in the area being altcoins, the highest of any other market. The leading coin in the category is Litecoin making up 2.9% times larger share of trading in East Asia than the average share across other regions. In Western Europe and North America investors commit less than 15% of their funds to altcoins. 

While professional investors make up most of the East Asian market, countries like China, Japan, and Korea have seen relatively high levels of crypto adoption among everyday traders. Krishna Sriram, Head of Partnerships at Japan-based cryptocurrency security firm Quantstamp told Chainanalysis she believes this is because there were already robust electronics payment systems established in those countries. These robust systems made digital money feel like less of a leap for investors.

The size of the East Asian crypto market is likely due to the concentration of mining operations in the region. Around 65% of all Bitcoin hash rate comes from China and East Asia is home to some of the largest mining rig manufacturers like Bitmain. 

The amount of crypto being mined means there is always a steady stream of crypto flowing to and from East Asian addresses. 44% of transactions by volume involving an East Asian address are counterpartied with an East Asian address compared to only 22% in Western Europe, according to the report. 

By Emily Mason

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