Eastern Asia’s Crypto Market Growth Halts, China’s Crypto Transaction Volume Drops by 31% YoY

Chainalysis, a US-based blockchain analysis firm, has published a new research report Thursday, This shows that Eastern Asia is the fourth largest cryptocurrency market. It received $777.5 million worth of crypto between June 2022 and July 2021.

This represents less than 13% of the global transaction volume over that period.

The study found that Eastern Asia is losing ground to other regions this past year. According to research, the region had a 4% year-over year increase in transaction volume, making it the area with the least crypto activity. According to crypto transaction volume, the region was the third largest region last year.

Source: Chainalysis

This loss could be attributed to the drop in cryptocurrency activity in China which is the largest market in Asia. The study found that China’s crypto transaction volume dropped by 31% over the past year, but its neighbors Japan and South Korea saw more than twice the transaction volume. The study found that this is likely due to Chinese government crackdowns against crypto activity in the past year.

The data also shows that Eastern Asia is not a hub for cryptocurrency trading. Over the year-long time period Chainalysis conducted this study, DeFi made up just 28% of transaction volume in Eastern Asia, less than all but one other region – Eastern Europe – as shown in the figure below.

The data shows that Japan’s crypto market has grown significantly over the year-long period studied, with on-chain transaction volume increasing 113.2% over the previous 12 months, compared to 72% for the next-closest country, South Korea, and 31.1% for China.

To explain Japan’s resilient crypto activities, one of the reasons is due to the relatively high embrace of DeFi. Despite having a smaller overall crypto market, Japan’s DeFi transaction volume is almost double the size of South Korea’s at $56.7 billion and close to China’s total of $67.6 billion, as indicated in the figure below. According to the research, trading on decentralized exchanges (DEX) may be taking over trading on centralized service which has not experienced similar growth.

China has experienced a dramatic decline in cryptocurrency activity as a result of the crackdowns that were imposed by the Chinese government last year, as shown in the above data. However, despite a 31.1% drop-off in transaction volume, China remains the biggest crypto market in the region, the fourth overall in the world, and ranked tenth for grassroots adoption on Chainalysis’ global crypto adoption index.

While government crackdowns have had a clear impact, China’s cryptocurrency market remains strong, with healthy transaction volumes across both centralized and DeFi services. The figure below shows that China’s trading activity has started to pick back up in recent months, and even mining, which saw a massive fall in activity following the ban, has made a comeback in the country.

Early this month, Chainalysis released a similar study showing that emerging markets, such as the region of the Middle East and North Africa (MENA), dominated this year’s global crypto adoption index. Latin America came in second place for transaction volume growth. North America was third and Central and Southern Asia were close behind.

Image source: Shutterstock

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