Europe Playing Bigger Cryptocurrency Role | ETF Trends

Asia and North America are typically viewed as the epicenters of cryptocurrency adoption and innovation. But Europe is increasingly making its presence felt on the global digital currency stage.

That could be a long-term plus for major cryptocurrencies such as bitcoin and ethereum as well as related ETFs trading in Europe and the U.S. Clearly, part of Europe’s appeal as it relates to crypto adoption is that the continent is home to several large, industrialized economies. Those include the U.K., Germany, France, Italy, and more. Data already confirms that Europe plays a prominent role in global cryptocurrency markets.

“Central, Northern and Western Europe (CNWE) is the second-largest cryptocurrency economy in the world, behind North America. The region accounted for 17.6% of global transaction volume between July 2022 and June 2023, according to a report by Chainalysis,” noted CME Group.

Europe Major Driver of Crypto Trading, Use

Europe is picking up the slack at a time when digital currency trading volumes in Asia are declining and as China exhibits harsh regulatory attitudes toward bitcoin and related fare. The euro is the second-most-used fiat currency for digital currency transactions behind only the U.S. dollar.

Add to that is mounting evidence that institutional investors in Europe are increasing their exposure to crypto markets.

“There is also tremendous activity in decentralized finance (DeFi) coming out of Europe that essentially bypasses third parties and institutions from financial transactions,” added CME Group. “The growth is also driven by institutional inflows. Year-to-date, 24% of Bitcoin and Ether futures volume at CME Group has been transacted from the EMEA region.”

Europe’s Broadened Crypto Participation

Last week, CME launched Micro Bitcoin Euro and Micro Ether Euro futures contracts. Those moves broaden European cryptocurrency participation, particularly among professional investors. Those contracts could also be approachable for active retail traders on the continent. That’s because they represent 0.1 bitcoin and 0.1 ether.

Also of note regarding Europe’s crypto footprint is that the region is home to a more expansive slate of digital currency exchange traded products. That indicates the continent can play an important role in enhancing liquidity in the market.

“For an asset to be investable by institutions, it needs to have sufficient liquidity. European institutions have access to exchanges that offer a much broader range of crypto ETFs, Exchange-Traded Notes (ETN), funds, derivatives, perpetual contracts and a maturing array of platforms on which to transact for quite some time,” concluded CME.

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