Chainalysis found that the Central, Northern and Western regions of Europe (CNWE) have the biggest cryptocurrency economy in the world, receiving over $1 trillion worth of cryptocurrency over the last year. The region accounted for about 25% of all global activity related to cryptocurrency and was spurred on by the widespread corporate interest in the DeFi market. CNWE managed to take the top spot in this year’s ranking, according to Chainalysis, after coming in second last year behind Eastern Asia. “An influx of institutional investment, signaled by large transactions, drove most of the growth, though retail activity also increased. Perhaps most interesting is CNWE’s unique status as an international hub in the world cryptocurrency economy,” Chainalysis researchers explained. “CNWE is the biggest cryptocurrency trading partner for every other region we study, sending at least 25% of all value received by other regions, including a whopping 34% for North America.” There were massive increases in the number of large institutional-sized transactions starting in July 2020. Chainalysis classifies large institutional-sized transactions as transfers of more than $10 million worth of cryptocurrency. The value of large institutional-sized transactions grew to $46.3 billion in June 2021 from just $1.4 billion in July 2020. DeFi platforms have dominated the large institutional-sized transfers over the last 12 months. The majority of the transactions involved Ethereum and wrapped Ethereum, which Chainalysis said is commonly used in DeFi protocols. “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,” Chainalysis found. A number of institutional investors are also getting involved in cryptocurrency through a process called “staking,” where companies lend their cryptocurrency to DeFi protocols so that they have liquidity. The stakers then get interest on the cryptocurrency that is lent out to borrowers. “As the biggest counterparty to every other region, CNWE is a key source of liquidity to cryptocurrency investors around the world. CNWE’s biggest trading partner is North America, followed by Eastern Asia, Central & Southern Asia, and Eastern Europe,” Chainalysis found. “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. We believe that for some regions like North America, this dynamic reflects a convergence of institutional investors and professional traders on a handful of platforms. On the other hand, for regions like Eastern Europe and Central & Southern Asia, we believe the service overlap in those cases is also driven by remittance payments being sent from CNWE, as this would mirror remittance activity we see in the fiat world.” With almost half of its value sent to DeFi protocols, the UK leads the list of region countries by value received. France, Germany, the Netherlands, and Switzerland were the next four countries on the list. Almost every country has about 25% to 30% of all transaction volume involved in stablecoins, while most countries have somewhere between 8% to 11% invested in altcoins. Ethereum and wETH are the most popular cryptocurrency in almost every country, according to Chainalysis, accounting for about 40% of the transaction value, followed by Bitcoin at 27% in the UK. Germany sees about 28% of its transaction volume in Bitcoin, while France has just 20%. “Overall, though, while there are small differences between the individual countries’ exact breakdown of activity, one thing is clear: 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,” Chainalysis said.
