Despite the recent regulatory framework updates in China, crypto investors are stepping in the Chinese market stronger than ever.
Almost all of the Bitcoins, bought in China, were obtained via the Tether stablecoin – a project that gathered a lot of controversy in the past couple of years. Over-the-counter exchanges also exploded in numbers, allowing for spot trading, despite the regulations.
Chainalysis researched how Chinese investors get Bitcoin. The result – 99% of the total Bitcoin amount in Chinese hands was purchased with USDT tokens. Countries like Japan and Korea, however, still rely on fiat to buy Bitcoin.
Chainalysis also reported that almost 40% of the total Bitcoin on-chain activity is from the Asia-Pacific region. Asia-Pacific also accounted for 35 percent of Bitcoin, received from the top-50 Bitcoin-active exchanges.
Tether’s market cap exploded in the past months, reaching little over $4.1 billion, mainly due to investors using the stablecoin as a “gateway” for buying Bitcoin. Tether’s dominance in spot trading began in 2018, moments after the Chinese government banned its citizens from trading yuan for cryptocurrencies directly. Trading yuan for Tether, however, is legal in China, and investors are grabbing the moment to trade their Tether holdings for Bitcoin.
Kim Grauer, a senior economist at Chainalysis, stated that the rise of OTC exchanges in China is something to consider.
“Since OTC exchanges provide great liquidity, people should consider the price formations in China. The size of the trading right now is astonishing”, Grauer added.
Binance, the world’s largest crypto exchange, quickly followed the trend and opened a Peer-to-peer yuan-trading service. Chainalysis researched ten Over-the-counter exchanges, resulting in $877 million worth of Bitcoin since September 2019.