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Resilient OTC Markets: Hong Kong and China Defy Crypto Winter, Says Chainalysis

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Oct 4, 2023 at 07:39 am

According to a recent report by a research firm, East Asia constitutes nearly 8.8% of the total worldwide cryptocurrency transactions.

During the past year, Hong Kong's thriving over-the-counter crypto market facilitated a trading volume of $64 billion, which is not significantly lower than China's $86.4 billion. This is noteworthy considering Hong Kong's smaller population and the prevailing bearish trend in the global crypto sphere.

While data indicates a decline in transaction values in both China and Hong Kong over the past year due to Beijing's ongoing stringent stance on crypto assets and the prolonged crypto market downturn, Chainalysis argues that the substantial presence of OTC markets, along with their relative stability amid regional and global challenges, reflects a certain level of leniency from Beijing towards cryptocurrencies.

The report suggests that the increasingly intertwined relationship between China and Hong Kong has led some to speculate about Hong Kong's rising status as a crypto hub. This has prompted discussions on whether the Chinese government is reevaluating its stance on digital assets, or at the very least, becoming more receptive to crypto-related ventures.

Chainalysis further points out that Hong Kong takes the lead in significant institutional crypto transactions compared to other Asian regions. Their data reveals that a substantial 46.8% of Hong Kong's annual crypto trades involve institutional transactions surpassing $10 million. In contrast, retail trades under $10,000 constitute merely 4% of the city's total volume, slightly below the global average of 4.7%.

Data by ChainanalysisData by Chainanalysis

On the contrary, South Korea places a significant emphasis on retail trading on centralized exchanges. "Professional" traders conducting transactions ranging from $10,000 to $1 million contribute to 40% of the total volume.

As for Japan, its transaction breakdown closely mirrors global trends, striking a balance between centralized exchanges and decentralized finance (DeFi) protocols.

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