Crypto Adoption

Chainalysis, a blockchain analytics firm, released the 2022 global crypto adoption index. Despite a bear market, global crypto adoption has leveled off in recent months after gradually increasing since the middle of 2019 and is still higher than pre-bull market levels, according to Chainalysis.

Growing Crypto Adoption

Using a grassroots approach, the index compiles a list of 146 ranked countries. According to Chainalysis, countries are not ranked by the total number of cryptocurrency transactions. However, it focuses on the locations where the most money is spent. It also shows which countries have the most retail investors and non-professionals adopting digital assets.

In the second quarter of 2021, global crypto adoption reached an all-time high. Adoption has shifted since then. It fell in Q3, the same quarter that crypto prices fell. However, it recovered in Q4 when prices reached new highs, only to fall again in the two most recent quarters. It implies that long-term cryptocurrency investors have remained invested throughout the downturn.

Global Crypto Adoption Index

The index, which has been updated for the third time, includes on-chain cryptocurrency value received from centralized exchanges, peer-to-peer trading volume, the on-chain crypto value received from DeFi protocols, and on-chain retail value received from DeFi protocols. Following that, these figures are weighted by purchasing power parity per capita.

The top three and half of the top twenty countries have lower-middle incomes; eight are upper-middle-income countries, with the United States and the United Kingdom being the only high-income countries.

Why are the US and UK the only High-Income Crypto Adoption Countries?

According to Grauer, the head of research at Chainalysis, one of the main reasons many countries encourage individuals to invest in cryptocurrencies is not a desire for the underlying cryptocurrency but rather capital controls that allow it to be traded.

The United Kingdom is ranked 17th worldwide for crypto adoption, up four places from 2021. Apart from the United States, which ranked fifth, it is the only high-income country in the top 20. Decentralized finance, or DeFi, refers to financial services delivered using blockchain technology and accounts for 50% of cryptocurrency activity in the United Kingdom.

According to a recent study, the United Kingdom is the only significant European economy that has seen an increase in crypto adoption since the beginning of the year. As a result, the sharp drop in the pound’s value may be luring investors into cryptocurrencies such as Bitcoin.

The UK’s technology sector and top-tier banking institutions are two of the most compelling explanations for the country’s dominance in crypto. Furthermore, the UK leads the world in cryptocurrency adoption due to top financial institutions, a thriving fintech industry, and a weakening pound.

The United States is among the top 20 countries in cryptocurrency adoption because it has the world’s largest capital market, the best financial institutions, and the most advanced technology. Furthermore, citizens in the United States have low trust in the financial system and the government, which is why they are shifting to decentralized cryptocurrency adoption.

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