According to a Chainalysis report, Central, Northern, and Western Europe (CNWE) have become the world’s biggest crypto economy. Over the last year, the region has received over $1 trillion worth of cryptocurrency, reaching 25% of all global activity. The tremendous growth that started in July 2020 pushed Europe from second to first place since last year. Amid retail activity increased, institutional investments drove most of the transactions, with 50% going to DeFi.
The report, which was released Tuesday, found that the CNWE region accounted for 25% of global crypto activity between July 2020 and June 2021. The region witnessed a sharp uptick in transaction volume across all crypto sub-categories, especially decentralized finance (DeFi). Chainalysis describes crypto transactions as anything involving trade, investments, and business dealings.
CNWE experienced major growth in transaction volume across all cryptocurrencies and service types, but especially on DeFi protocols. According to Chainalysis, the growth was majorly a result of an influx of institutional investment signaled by large transactions. From July 2020, there was an increase in transfers above $10 million worth of crypto.
“CNWE’s transaction volume grew significantly across virtually all cryptocurrencies and service types, but especially on DeFi protocols. An influx of institutional investment, signaled by large transactions, drove most of the growth, though retail activity also increased,” said in the report. “Large institutional cryptocurrency transaction value grew from $1.4 billion in July 2020 to $46.3 billion in June 2021, at which point it made up more than half of all CNWE activity.”
Chainalysis reveals that the lion’s share of all institutional-sized crypto transfers over the last year tended to DeFi platforms.
“The data shows that over the last 12 months, the majority of large institutional-sized transfers went to DeFi platforms. Given that, it’s not surprising that the majority of those large institutional transfers were made in Ethereum (ETH) and wrapped Ethereum (wETH), an ERC-20 token of equivalent value to Ethereum commonly used in DeFi protocols,” a report added.
The United Kingdom saw the largest volume of cryptocurrency trading in the CNWE region, at around €145 billion. The UK was followed by France, Germany, the Netherlands, and Spain.
At the same time as crypto transaction volumes in Europe began to increase in mid-2020, volumes in East Asia – the previous world cryptocurrency capital by transactions – entered a steep decline.
Chainalysis also breaks down crypto usage among the different classes of digital assets.
“Stablecoin usage is consistently between 25% and 30% of all transaction volume for most countries. Altcoin usage is similarly consistent at 8% to 11% for most regions. However, we see more variance in the breakdown between Bitcoin and Ethereum or wETH. Combined, Ethereum and wETH are the most popular cryptocurrency in nearly every country.”
CNWE received over $1 trillion of digital assets in the last year, which equates to 25% of activity worldwide.