Chainalysis has shared their 2022 Global Crypto Adoption Index Report.
For the third consecutive year, Chainalysis ranked all countries “by grassroots cryptocurrency adoption.
While commenting on what is grassroots adoption of cryptocurrency, Chainalysis explained that they could easily rank countries by “raw” cryptocurrency transaction volume, which would give you a straightforward view of “where the most cryptocurrency activity is happening.”
However, the goal of their index is “to measure where the most people are putting the biggest share of their money into cryptocurrency.” While institutional activity is important to that, the blockchain analysis firm also wants “to highlight the countries where individual, non-professional investors are embracing digital assets the most.”
As noted in the update, Chainalysis’ Global Crypto Adoption Index is “made up of five sub-indexes, each of which is based on countries’ usage of different types of cryptocurrency services.”
They rank all 146 countries “for which we have sufficient data according to each of those five metrics, take the geometric mean of each country’s ranking in all five, and then normalize that final number on a scale of 0 to 1 to give every country a score that determines the overall rankings.” The closer the country’s final score is to 1, “the higher the rank.”
As mentioned in the update, peer-to-peer (P2P) exchange trade volume, “weighted by PPP per capita and number of internet users”
P2P trade volume “makes up a significant percentage of all cryptocurrency in emerging markets.”
As noted in the blog post, DeFi has been “one of the fastest-growing areas of cryptocurrency over the last two years.” In fact, as we see in the case of DEXs vs. CEXs, decentralized cryptocurrency protocols, which primarily use Ether as opposed to Bitcoin, have now “overtaken centralized services in on-chain transaction volume.”
Chainalysis data shows that global adoption “has leveled off in the last year after growing consistently since mid-2019.”
As noted in the update:
“Global adoption of cryptocurrency reached its current all-time high in Q2 2021. Since then, adoption has moved in waves – it fell in Q3, which saw crypto price declines, rebounded in Q4 when we saw prices rebound to new all-time highs, and has fallen in each of the last two quarters as we’ve entered a bear market. Still, it’s important to note that global adoption remains well above its pre-bull market 2019 levels.”
The report added:
“The data suggests that many of those attracted by rising prices in 2020 and 2021 stuck around, and continue to invest a significant chunk of their assets in digital assets. That also aligns with our previous research showing that cryptocurrency markets have been surprisingly resilient through recent declines. Big, long-term cryptocurrency holders have continued to hold through the bear market, and so while their portfolios have lost value, those losses aren’t locked in yet because they haven’t sold— the on-chain data suggests those holders are optimistic the market will bounce back, which keeps market fundamentals relatively healthy.”
For more details on this update, check here.