East Asia region, one of the largest digital money markets, demonstrates this dominance in fixedcoins such as Tether, unlike other regions. We have examined the reasons why Tether usage is so widespread in the region and the importance of fixedcoins for the region.
According to Chainalysis research, the East Asia region, the world’s largest digital money market, has a 31% share in digital currencies traded in the last 12 months. East Asia-based addresses, which are 77% more active than Western Europe, the second most efficient purchasing region, have shown over 107 billion dollars in purchasing activity during this time.
Almost 90% of the crypto money transactions made in the region in the last 12 months were worth more than 10 thousand dollars. This shows that the cryptocurrency market in East Asia is clearly under the control of professional investors. When it comes to professional investor hegemony, there are only two regions that can challenge East Asia: North America and Western Europe. But East Asia surpasses both rivals in this regard.
Despite this active stance of East Asia in the crypto money market; In terms of Bitcoin trading, the region ranks last with a rate of 51% compared to others. North America leads the list with 72% of Bitcoin transactions, Western Europe with 66% and Eastern Europe with 57%.
East Asia and the Usage of Hardcoins
The reason why the BTC rate in East Asia remains at 51% can be shown that most transactions made with digital currencies in the region are made with altcoins and fixedcoins. Litecoin, for example, has almost 3 times more trade volume in East Asia than other regions. We can replicate these examples by saying that the market for Crypto.com Coin in East Asia has 1.9 times the volume, the Maker market 1.3 times and the Bitcoin Cash market 1.2 times more than other regions. Although altcoins have an important place in the East Asian market, the importance of these digital currencies fixed on a fiat currency is much greater.
The most preferred fixedcoin in the East Asia region, which covers 33% of the use of fixedcoin in the market, is Tether, which is fixed to the US dollar. Tether is one of the most popular fixedcoins in East Asia with a rate of 93%. According to the latest data, in June, the most preferred digital currency of East Asian addresses became Tether, bypassing Bitcoin.
Why are fixedcoins so preferred?
The Chinese government’s restriction on cryptocurrency transactions within the borders of the country in 2017 resulted in an increase in the use of fixedcoins. Tether, pegged to the dollar with the effect of this decision, has become the primary way of reaching Bitcoin and other currencies for cryptocurrency investors in China. Buying Tether through OTC brokers or foreign bank accounts has become widespread, as the ban also closed the Yuan / Tether transactions in China. Since it is pegged to the dollar and is seen as a fiat currency, it has become logical for East Asian investors to prefer Tether, which has less market volatility compared to Bitcoin.
Tether CTO Paolo Ardoino also touched on Tether’s organic development, driven by the shortcomings of traditional financial assets. With its deep liquidity, low transaction fees and fixed price, Tether’s; Ardoino also said that money transfers or lending transactions offer unique advantages for people’s safe investment preferences and cryptocurrency traders and made statements to support the Tether orientation in China.
Quantstamp’s Krishna Sriram said that in addition to professional traders, ordinary investors are also preferred to use Tether both in East Asia and globally to avoid depreciation of their currencies and to transfer money across borders.
Entrepreneur and analyst Dovey Wan underlined the importance of digital currency bans in China for the use of Tether and drew attention to Tether’s effectiveness in daily transactions. Saying that Tether is now a dollar for most people in China, Wan said that many businesses accept Tether as payment from their customers abroad.
When asked why Tether and not other hardcoins, Wan highlights the dominance of Bitfinex in China. It is clearly known by the market that the exchange that makes the most Tether transactions is Bitfinex and the close relationship of this pair. Saying that Bitfinex is almost a Tether wholesaler in China, Wan argues that there is an OTC broker in every region and that these have a great role in facilitating the use of Tether.
50 Billion Dollars of Capital Escape Possibility
Although it has the highest rate of domestic activity, East Asia still sends more cryptocurrencies to foreign addresses than any other region. The East Asia region sends more than $ 50 billion of digital money to addresses abroad, while for Western Europe this value is just over $ 38 billion. Although some of this rate is the result of active mining movements in East Asia, a significant portion is believed to represent capital flight from China.
The Chinese government allows citizens to extract a maximum of $ 50,000 from the country each year. Although wealthy people managed to break this border with methods such as shell companies and real estate investments for a period; the government has put control over many of these methods. The digital money sector, on the other hand, provides a loose control in this area for investors with the help of its decentralized and anonymous structure.
In the last 12 months, commercial competition and the damage to the Chinese economy, with a multifaceted devaluation of the yuan, has reinforced the outflow of digital currency worth $ 50 billion from the country. Although it is not possible to evaluate all of these under the name of capital flight, this $ 50 billion can be considered as an upper limit for capital flight.
With their value pegged to a fiat currency, fixedcoins are a very logical choice for capital flight. Because fixedcoins, which have a very low market volatility compared to other digital currencies, prevent investors from losing value. Grayscale research director Philip Bonello also supported this opinion, saying fixedcoins are used in addition to cross-border transfers for most capital flight.