Cryptocurrency adoption in Latin America over the past 12 months has been higher than in any other region of the world, even as a prolonged crypto winter has driven some investors away from the market.
Between July 2021 and June 2022, BRL 2.9 trillion in cryptocurrencies were sent to the region, a growth of 40% compared to the previous period, according to Chainalysis.Latin America was the fastest growing region in cryptocurrency adoption in the last year (Source: Chainalysis)
These numbers, released this Thursday (20) in the 2022 edition of Chainalysis’s Global Cryptocurrency Adoption Index, consolidate Latin America’s position as the seventh largest cryptocurrency market in the world.
Brazil has great weight in this ranking, as it leads adoption in the region and ranks 5th in the world ranking, receiving just under $150 billion in cryptocurrencies in the last year.
The region is also home to four other top 30 countries on Chainalysis’ global cryptocurrency index, such as Argentina (13th), Colombia (15th), Ecuador (18th) and Mexico (28th).
“We have a very large volume coming from Brazil, which makes sense with what is happening there in the financial market. Hedge funds are diversifying to adopt crypto, and there is a lot of work being done to do so strategically. Not to mention Brazil’s role as Latin America’s financial hub,” explained Kim Grauer, research director at Chainalysis, at a press conference.
The bear market, which knocked the price of bitcoin and the market’s top cryptocurrencies down throughout the year, took its toll on trading volume in Latin America, but the big spikes in adoption last year still stand out in the big picture, according to Grauer. replied to Bitcoin Portal:
“If you compare the numbers year by year, Latin America is not in decline because of the recent bear market. Much of this growth in the region was happening before December 2021 and this is part of that period analyzed. Most days in crypto were actually bear days, but the few bull days end up outperforming bears.”
The characteristics of the Brazilian cryptocurrency market
For Grauer, what differentiates the use of cryptocurrencies in Latin America from other regions is that there is not just one reason why people use digital assets here: “Each country has different needs that can be solved with cryptocurrencies in different ways. .”
In summary, crypto adoption in Latin America is due to three main reasons: storing value, sending remittances, and investing for speculation or for the long term.
In the case of Brazil, because it has a more stable economic situation than some neighboring countries, the use of crypto-assets is more “sophisticated”, and this asset class tends to be sought after as a form of investment, seen as an option for those trying to make profits. bigger.
This differs from countries like Venezuela and Argentina, where cryptocurrencies, mainly stablecoins, are used as a hedge against high rates of inflation. In Mexico and El Salvador, international remittance is one of the most frequent uses of digital assets.
Differences also appear in the way Latin Americans do business. The use of centralized services in Brazil is more intense than in other countries in the region, while Colombia and Venezuela dominate negotiations via P2P.
The amounts that the population is willing to invest in the crypto market also varies. Retail investors in Brazil are more exposed to cryptocurrencies than those in other countries in the region. To illustrate this, Chainalysis brings data from the largest national brokerage, Mercado Bitcoin.
As the graph below shows, small retail investors (who invest less than US$1,000), large retail investors (who invest between US$1,000 and US$10,000) and professionals (who invest up to US$1,000) million), make transfers of much larger sizes than recorded in the rest of Latin America.
The population of Brazil also appears as the second in the region that invests the most in decentralized finance (DeFi) — only behind Chile — with this market representing more than 30% of the volume of cryptocurrencies that pass through the country. This category includes play-to-earn games and non-fungible token transactions (NFT).
The websites that Brazilians access
Chainalysis also released the list of websites that offer cryptocurrency services most accessed in Brazil, a ranking that only takes into account network traffic, and not the volume traded on these platforms.
Cryptocurrency exchange Binance leads the ranking, with 59 million hits from Brazil between July 2021 and July 2022, according to Chainalysis.
In the category of exchanges, Mercado Bitcoin appears in second place with about 10 million hits in the same period, followed by other platforms that record lower traffic, such as FTX, Foxbit, Novadax and Gate.io.
Here, it is noteworthy that the second most accessed crypto site by Brazilians, in the analysis of Chainalysis, is a gambling platform called FreeBitco.in, which received 31.9 million visits from the country between the months of July 2021 and 2022. .
On this site in question it is possible to identify scam characteristics. Right on the homepage, a popup appears promising to pay the user $200 in bitcoin every hour.
Also highlighted in the Chainalysis ranking was a large number of accesses by Brazilians to OpenSea, the largest NFTs market in the market, and to the play-to-earn game Axie Infinity.