Meta regions with biggest impact on cryptocurrency prices
The digital assets market has ballooned to a total market capitalization of $500 billion, and through the efforts of various participants, has all but established itself as a veritable industry in the decade or so since the inception of Bitcoin. Several different factors (from security concerns to regulatory announcements) have, throughout the years, played a role in the ebb and flow of the speculation driven cryptocurrency market.
Though the phenomenon that is cryptocurrency has found some measure of adoption globally, it has become rather evident that activity in certain regions of the globe hold more sway over digital asset price swings than others.
Events in regions with a higher concentration of cryptocurrency users seem to have a more significant influence over cryptocurrency price movements than regions with low user activity. The United States was initially the largest Bitcoin market on the planet, with most market making activity originating in North America in the early days.
The cryptosphere has grown into a more sophisticated machine in the years since the Mt. Gox and Silk Road scandals rocked cryptocurrency prices. According to Bloomberg, 50% of the world’s digital asset exchanges are based in the Asia-Pacific region, accounting for about 43 of the approximately 90 exchanges currently in existence, with North America coming in third with 15% of all exchanges, following Europe which is home to 24% of exchanges.
Cryptocurrency data research outfit, Mosaic, published a report in December 2018 , confirming the strong influence Asian events have on cryptocurrency prices. The 11 cryptocurrency related events originating from Asia, affected the market by an average of 18,61%, as the firm reports.
When Bitcoin’s price leaped from $6,200 to about $8,000 in mid-2018 , experts pointed to increased trading volume in the Asian market as the main factor behind the price jump. The rally coincided with the Chinese government’s increased devaluation of it’s national currency, leading many of China’s wealthy to turn to Bitcoin to preserve their wealth, as many an expert has postulated.
The reason Asia has come to have a dominant influence on the digital assets market is, almost by rule of thumb, sheer numbers. The Asian region accounts for most of the cryptosphere’s mining (owing to the relative affordability of electricity) and exchange activity.
Even with China having taken a firm stance on Initial Coin Offerings and Crypto-Fiat trading, Hong Kong, Japan, South Korea and Singapore have adopted a more crypto-friendly approach and picked up the slack
“Asia dominates cryptos because they’re very used to digital trading assets. South Korea has been trading digital goods related to gaming for two decades. When you move to a purely money based digital currency, they understand that culturally, so they get on board quickly,” started Arthur Hayes, CEO of Hong Kong based exchange, Bitmex, on the region’s influence on the cryptocurrency market.
Of the 37 exchanges launched during 2017 20 of them were Asian. 8 were based in Singapore with 4 registered in Hong Kong while South Africa and mainland China sporting 2 each. The boom in exchanges in the region, according to Mosaic, was helped along by China’s crackdown on digital currency exchanges.
The Language Factor
Mosaic estimates that as of late July 2018, there were 86 Exchanges hosting BTC pairings. The company found that of the 24 odd languages support, 9 are Asian. Namely, Mandarin, Korean, Japanese, Cantonese, Vietnamese, Thai, Hindi, Indonesian and Malay.
67% of the observed exchanges either supported Mandarin as a either a primary of secondary language, making it the second most used language next to English. Korean came in third, with 33% support with Russian and Japanese taking forth and fifth with 30% and 23% support respectively.
Possible Return of Western Dominance
2019 has been earmarked as the year that institutional money finally floods the cryptocurrency market. Western players put great emphasis on the regulatory compliance of digital assets in 2018.
The United States securities regulatory body, the SEC is set to make decisions on several Bitcoin based Exchange Traded Funds and a number of Investment banks, Nasdaq (in collaboration with Gemini cryptocurrency exchange) and the much anticipated Bakkt platform are set to launch this year.
Europe which is home to about 21 exchanges will host the launch of Desico, a fully compliant security trading platform. This probably indicates a possible swing in market dominance, back to the west.
Small Countries Influencing Cryptocurrencies
The island nation of Malta is home to the most legal cryptocurrency trading on the planet. According to Bloomberg, Malta “offers legal certainty in a space that is currently unregulated.”
The Mediterranean nation is the new home of digital asset exchange, Binance, which announced its decision to make the switch from their Honk Kong HQ in March of 2018. The Maltese government all but rolled out the red carpet for the crypto exchange received a warm welcome from the Maltese Prime Minister, Joseph Muscat, in the form of a tweet.
The Government of Malta published a consultation paper stating that the technology that underpins digital assets could potentially be “used for much more than the transfer of currencies.”and went as far as proposing the establishement of a Malta Digital Innovation Authority (MDIA), which would oversee the “advancement and utilisation of digital ledger technology and its design and uses,” and “[promoting] education on ethical standards and legitimate exploitation, use and creation of technology in particular digital ledger technology.”
The Nation of Georgia is home to a population of about 4 million, which is about half the population of the United States State of Georgia. The small nation is, However, a big player in terms of digital asset friendly regulations.
Georgia ranks second in cryptocurrency mining volume according to a Benchmark study by the University of Cambridge Centre for Alternative Finance.
Georgians mine digital assets through set-ups in the own homes, provided mostly by US technology firm, Bitfury, which has an operation going near the Georgian capital Tbilisi.
The small Mediterranean island of Cyprus’ University of Nicosia was one of the first schools to offer courses in blockchain and cryptocurrencies.
Though regional dominance of digital assets is usually determined by trading volume and influence that events in the region have on cryptocurrency prices, friendly regulations and fostering an environment that is advantageous to the advancement of cryptocurrencies and blockchain will likely play a bigger role in future, as the biggest price movements are caused by regulatory whispering’s.