Last week, Bitcoin price finally ended its slumber and started to rise, dragging along the whole crypto space. Triggered by the growing anticipation of SEC’s approval of BTC spot ETFs, the first spike was based on fake news. The following one (and sustained) reacted to BlackRock’s iShares Bitcoin Fund listing on the Depository Trust and Clearing Corporation’s website.
If approved, the Bitcoin spot ETF will open the biggest cryptocurrency to millions of investors who are looking for an alternative way to invest in this item. As the inflation is raging, more and more people and companies are looking at Bitcoin as an alternative store of value.
However, Bitcoin’s role as a means of exchange is equally important, and one can argue that its value is directly linked to its actual use. This is also true for other cryptocurrencies, making crypto adoption an important metric to follow.
On-chain analytics firm Chainalysis specializes in exactly that. Its annual Geography of Cryptocurrency report gives an important understanding of how crypto is used by people in different countries.
The main insight we can take from this year’s edition is rather encouraging for crypto and its mission of offering an alternative to fiat money. Despite the drastic drop in crypto prices, their use has been more or less maintained all over the world, but particularly in lower middle-income countries, which most often struggle with their national currencies.
Geography of cryptocurrency
Chainalysis uses a complex methodology to assign 155 countries a score in its adoption rankings. It is based on 5 sub-indexes, weighted by characteristics like population size and purchasing power, which are then normalized on a 0 to 1 scale.
The sub-indexes include the on-chain value received at centralized exchanged, the on-chain retail value (same as the previous one, but only counting small transactions under €10k), peer-to-peer exchange trade volume, on-chain value and retail value received from DeFi protocols, each one weighted by purchasing power parity (PPP) per capita.
When reindexed over a timeframe, this score shows that global crypto use has fallen along with the crypto prices. It has been increasing since the beginning of 2023, but the recovery has been much stronger in one particular segment of countries - those that the World Bank classifies as lower middle income.
Source: Chain analysis
These countries include India, Nigeria, Vietnam, and Ukraine, all making it to the top-5 of the Chainalysis ranking (the only country that stands out is USA, holding the 4th place).
However, the cases of Turkey and Argentina (12th and 15th places in the ranking, respectively) are probably the most illustrative of crypto use as a fiat alternative.
Written by D.Center
