Bitcoin‘s recent surge to record-breaking levels is primarily fueled by the robust participation of investors in Asia, with traders from South Korea, China, and other Asian nations accounting for approximately 70% of bitcoin trading volumes. This trend mirrors the scenario witnessed in 2021 when bitcoin reached similar highs, according to data from The Block, a prominent crypto exchange.
In February alone, Asia contributed a staggering $791 billion to the total bitcoin trading volume of $1.17 trillion, while North American investors trailed behind with $113 billion. This geographical distribution has persisted since November, highlighting the sustained dominance of Asian investors in the cryptocurrency market.
FOMO (Fear of Missing Out) has taken hold in China, particularly among small investors dissatisfied with the sluggish performance of the stock market. Searches for “bitcoin” on the popular messaging app WeChat surged twelvefold in February, reflecting a growing interest in cryptocurrency investments.
“I want to buy some bitcoin at a good price and hold,” said Mia Wang, a finance industry professional based in China’s Zhejiang province. Despite the considerable price surge, Wang expressed concerns about a potential lack of correction in the market.
Bitcoin surpassed $69,200 on Tuesday, exceeding its November 2021 peak with a remarkable 160% increase since early October. This surge has been primarily attributed to the approval of spot bitcoin exchange-traded funds (ETFs) by U.S. regulators, with BlackRock’s iShares bitcoin trust benefiting significantly from the influx of investments.
Traders are also flocking to bitcoin in anticipation of the upcoming “halving” event in April, which could decrease supply and further drive up prices. With the limited supply of 21 million bitcoins, of which 19 million have already been mined, scarcity plays a pivotal role in shaping the cryptocurrency’s value.
The regulatory landscape for bitcoin varies across Asian jurisdictions, ranging from the relatively liberal regulations in Japan to the outright ban in China. While spot bitcoin ETFs are prohibited in South Korea, local brokers facilitate easy access to bitcoin futures ETFs.
South Korea, commanding a 10% share of the bitcoin cash tokens and listed futures markets, has witnessed a surge in investments. South Koreans have invested $23.4 million in the U.S.-listed 2X Bitcoin Strategy ETF this year, surpassing the total investment in 2023. Additionally, they invested $6.89 million in Proshares Bitcoin Strategy ETF in February.
Hong Song-uk, a cryptocurrency analyst at NH Investment & Securities, explained, “Because trading of bitcoin ETFs has been banned here, more and more Koreans are buying bitcoin ETF futures, which is helping with its pop now.”
While U.S.-based exchanges like Coinbase, Bitstamp, and Binance continue to dominate global volumes with a 50% share, Hong Kong has embraced crypto trading by decriminalizing it over the past year. The city’s largest bitcoin futures ETF, managed by CSOP Asset Management, has seen its assets under management increase fivefold in the last five months to over $100 million.
In India, where several local crypto exchanges operate legally, there is significant interest, though a substantial portion of trading occurs on offshore exchanges like Binance and KuCoin. Between July 2022 and July 2023, Indians traded crypto worth 350,000 crore rupees via offshore platforms, representing over 90% of the total crypto trading volume by Indians, as estimated by the Esya Centre, a local think-tank.
