US Regulatory Crackdown Spurs Asian Investors to Buy Bitcoin

According to recent data from Glassnode, a leading on-chain analytics firm, an intriguing contrast has arisen between the cryptocurrency supplies held by investors in different regions. Glassnode divides Bitcoin addresses into different regions based on the hours they have been making transactions in. By examining the timestamps of all transactions created by an entity, Glassnode can probabilistically determine the probability of each entity being located in the US, Europe, or Asia.

The analysis shows that the supply of Bitcoin held by US investors was growing at an accelerating pace during the first half of 2021, peaking during the bull run. However, the rate of increase slowed down in the second half of the year, and the supply began to decrease in 2022, as the bear market took hold and LUNA and 3AC crashes occurred. The year-over-year change of the US-based BTC supply has continued to decline since then, currently standing at a value of -7.5%, indicating that the supply has shrunk by 7.5% since May 2022.

In contrast, the Asian supply of Bitcoin began to increase at around the same time that American investors began to shed their holdings. The change in the pace at which the supply held by Asian traders transformed was almost exactly the same as what the balances of the US-based wallets saw, but in the opposite direction. Currently, the year-over-year change in the Asian supply stands at +6.9%, indicating that Asian investors have purchased a similar amount to what US holders have sold, suggesting a direct transfer of coins between the two supplies.

It is likely that the tightening of cryptocurrency regulations in the US is the main reason for this transition of supply. One example of this is the regulatory crackdown that Coinbase has recently experienced from the Securities and Exchange Commission (SEC). The increased regulation and scrutiny in the US may have prompted US investors to sell their holdings, which were then purchased by Asian investors.

It is worth noting that the above analysis is based on probabilistic geolocation of Bitcoin supply at the entity level and is subject to certain limitations. Nevertheless, the data highlights the shifting global dynamics of Bitcoin ownership and underscores the importance of tracking on-chain data to gain insights into the cryptocurrency market.