The world of cryptocurrencies is getting back on track in 2021 after a couple of volatile years. At the time of writing this article, the value of the global cryptocurrency market touched $2.07T, according to CoinGecko, which tracks more than 8,800 coins.
Europe: World’s largest crypto market
According to a new study by Chainalysis, Europe is the world’s largest crypto market with investment in Decentralised Finance (DeFi) driving a surge in transaction volumes.
Central, Northern, and Western Europe (CNWE) have received over $1T worth of cryptocurrency over the last year. This represents 25% of global activity, says the report. CNWE ranks just second to Eastern Asia.
DeFi platforms dominated large institutional-sized transactions
There were massive increases in the number of large institutional-sized transactions (more than $10M worth of cryptocurrency) starting July 2020. The value of large institutional-sized transactions grew to $46.3B in June 2021 from just $1.4B in July 2020.
The data shows that DeFi platforms have dominated large institutional-sized transfers in the past 12 months. The majority of the transactions involved Ethereum and wrapped Ethereum (wETH).
“DeFi protocols represent three to four of the top five services in most months, with Uniswap, Instadapp, and dydx making frequent appearances. Binance and Coinbase, meanwhile, remain the most popular centralized exchanges,” says Chainalysis.
Betting on Staking
A large number of institutional investors are also getting into cryptocurrency through “staking,” where companies lend their cryptocurrency to DeFi protocols so that they have liquidity. In return, the stakers earn interest on cryptocurrency that is lent out to borrowers.
Cryptocurrency trading partner
Chainalysis says the CNWE is the biggest cryptocurrency trading partner for every other region globally, sending at least 25 per cent of all value received by other regions. This includes a whopping 34 per cent for North America.
Chainalysis also found that CNWE is a key source of liquidity to cryptocurrency investors around the world.
“CNWE has high service overlap with more regions than any other, displaying particularly strong relationships with Eastern Europe, North America, and Central & Southern Asia. Services contributing to this dynamic include eToro, Bitstamp, and CryptoKitties,” says the report.
UK leads in cryptocurrency activity
According to the report, the UK is driving the most cryptocurrency activity when looking at value received – leading by a wide margin of $170B. 49 per cent of this is from value sent to DeFi protocols. France, Germany, the Netherlands, and Switzerland round out the top five.
Ethereum and wETH: Most popular cryptocurrency
Ethereum and wETH are the most popular cryptocurrency in almost every country, according to Chainalysis, accounting for about 40 per cent of the transaction value, followed by Bitcoin at 27 per cent in the UK. Germany sees about 28 per cent of its transaction volume in Bitcoin, while France sees just 20 per cent.
“CNWE has become the world’s biggest cryptocurrency market, and its growth over the last year was largely driven by institutional investors and other whales moving into DeFi,” concludes Chainalysis.