Under increasing regulatory pressure from the US, the crypto industry is seeing a new trend forming, affecting the dynamics of global Bitcoin demand. This shift is best reflected through the annual Bitcoin (YoY) supply across regions.
An on-chain analyst from Glassnode has just announced that the supply of Bitcoin in the US has decreased by 11% year-on-year, starting in June 2022. Meanwhile, the supply of Bitcoin in the Asian crypto market has increased significantly (up nearly 10% over the same period), reaching an all-time high.
This shows a shift in Bitcoin supply between the US and Asia. Regulatory pressure from the US has contributed to a decrease in the supply of Bitcoin in the country, while Asia is becoming an increasingly important market with an increase in supply.
The rising regulatory heat and US hostility towards cryptocurrencies has kept traders apprehensive and shunned. Meanwhile, Asia is opening up and welcoming cryptocurrencies.
Recently, Hong Kong’s Securities and Futures Commission (SFC) facilitated a more crypto-friendly environment by licensing more than eight crypto companies by year-end and reducing fees regulatory requirements for cryptocurrency exchanges.
Hong Kong has recognized crypto as an asset and seeing great potential, several crypto institutions have been quick to take advantage of Hong Kong’s crypto-friendly rule. In addition, Bitget has committed to invest $100 million to strengthen the web3 ecosystem in Asia.
Glassnode emphasizes that this is an opposing change from the 2020-2021 bull cycle. US dominance fell in 2021 and turned negative in mid-2022, concurrently with the collapse of the Terra ecosystem and increased regulatory pressure. The government and federal regulators have taken coercive measures to reduce the power of the cryptocurrency industry.
Not only Bitcoin, Glassnode has also observed major changes in stablecoin supply. The total stablecoin supply from the top 5 issuers has dropped 7.5% or $10 billion since the start of the year. This decline was mainly due to Circle’s USDC, a stablecoin that was previously very popular with US institutions. USDC supply has decreased by $15.7 billion by 2023, or 35%. Circle was also hit hard due to its involvement with Silicon Valley Bank (SVB), which went bankrupt.
Meanwhile, the global Tether supply has grown by $17 billion by 2023, increasing by 25% to reach a record circulation of $83 billion.
Glassnode concluded: “As stablecoins are not profitable and regulatory pressure in the US is increasing, US capital is currently less active in the digital asset sector.”