Whose demand is stronger in crypto? American vs. Asian
Cryptocurrency market never sleeps. The marketplace allows investors to trade 24/7, making cryptocurrency a global asset class. Are all cryptocurrency, however, equally ‘global’? Are bluechip names like BTC and ETH global enough? Is there any regional preference on a specific name? We would like to address these questions by diving into some simple data.
We first split daily return of each coin into two: the daily return from UTC 0AM to UTC 12PM, and return from UTC 12PM to UTC 0AM the following day. To simply put, the former time segment is Asian daytime, and the latter one is American daytime. We will call each respective segments ‘Asian return’ and ‘American return’ for an analysis. Based on the datasets covering time in between 2017–01–01 and 2022–03–31, the t-statistics of American-to-Asian returns (meaning, long in American time vs. short in Asian time) for our coin population on Binance Spot Market are shown as below. Basically you can think of the t-statistic as a measure of confidence on the difference between American and Asian returns. Because there are too many coins, I sampled a number of major names out of entire population for visualization purpose.
Observations
1. We can see that there are several coins with large t-stats (with signs). This observation implies that the difference between American and Asian returns are statistically significant for those coins.
2. Coins with positive t-stats have their American returns exceeding their Asian returns, and we will classify those coins as ‘American coins’. Similarly, coins with their Asian returns surpassing their American returns would be ‘Asian coins’. An interpretation of American coins with large t-stats is that they have relatively stronger upward pressure during American daytime than Asian daytime, and vice versa for Asian coins with large negative t-stats. These regional preference attributions could potentially represent how a specific subset of our coin population is favored by each region.
3. Some highlights on most popular names — historically, BTC, ETH, BNB, CRV, SOL, SAND have been American coins, and LUNA, MATIC, WAVES, CHZ, AXS have been Asian coins. (Although, t-stat of LUNA is small and statistically insignificant. We will look into this in more detail below.) If the cumulative American-to-Asian returns for a coin have positive slope, then we could classify the coin to be an American coin, and a coin would be an Asian coin in an opposite case. For example, the plots for ETH and AXS look like these:
4. The below chart visualizes the distribution of American and Asian coins with respect to market-caps and ages. Generally American coins are relatively large cap and historically major, and Asian coins are relatively contenders. We can see that major coins like BTC and ETH are pretty strong American coins although they are supposed to be, and considered to be, the most ‘global’ cryptocurrencies. While game tokens like CHZ, AXS, ALICE, LOKA are Asian coins, MANA and SAND are American coins possibly hinting their Argentina origin. Such distribution could imply how crypto-industry has been evolving in each region. Using “Zone” classification provided by Binance, we can also check how the average t-stats of each Zone look like.
5. Notice that there are roughly the same number of American and Asian coins currently. This has not always been the case, however, and we would check how the ratio changed in the past. The below graph visualizes how the American-to-Asian coin ratio has changed from 2019 until now. Here, t-stats are calculated in a rolling basis based on the 1 year trailing data. At first, the population was heavily American but the number of Asian coins gradually increased and finally balanced out the population to achieve the current 50–50 split. The analysis does not materially change even when we only focus on the coins with statistically significant t-stats.
6. Now our favorite (and most whimsical?) example — LUNA. It has statistically insignificant t-stat because its regionality has been flipping from time to time. Below is the cumulative American-to-Asian returns of LUNA. It was born as an Asian coin, but soon changed its identity to become an American since mid 2021. Then, it returned to Asian once again from Dec 2021. Maybe… LUNA is truly ‘global’ in that sense. There are some other ‘global’ names, such as TRX and FTM. An additional research on these names would be required to further understand the flipping nature of their regionality.
The data and methodology used in this article are very basic and the observed price patterns could be attributable to other factors. We believe on-chain data could enrich our analysis to further explain the above-mentioned regional biases.
Disclosure: Hashed has established, maintained, and enforced strict internal policies and procedures designed to identify and effectively manage conflicts of interest related to its investment activities. This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. Furthermore, references to any securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services.
