In Latin America and Europe, traders often move their money to the Asian markets. In Latin America, 57% of cross-border transactions are less than USD 100.
Exchanges are gateways to Bitcoin markets, as the money that users trade on exchanges reveal. People in Latin America and Europe use more than two-thirds of the exchanges to buy cryptocurrencies with national fiat currencies, according to a recent University of Cambridge study.
This report indicates that, in 2019, 65% of the internal volume of Latin American exchanges came from purchases of Bitcoin with national fiat currencies. Similarly, it was 74% in Europe, 83% in the United States, and 62% in the Middle East and Africa. The lowest percentage was 54% in Asia and the Pacific (APAC).
Traders enter the cryptocurrency ecosystem through exchanges located in those regions “before migrating to APAC markets for commercial purposes,” according to the study. The high volume of transactions targeting markets in Asia (69% of trading offerings from exchanges in that region) is a proof of this.
In Latin America, 72% of transactions occur in the markets or through accounts of the same exchange. However, 28% may go to external wallets from other platforms or personal ones, for cryptocurrency holding.
This possible migration of traders could influence the level of leverage of exchanges. Fifty-five percent of Asian exchanges offer high leverage ratios of up to 110x and an average of 15x. That is higher than any leverage on exchanges in other regions. For instance, only 30% of exchanges in Europe offer leverage.
In almost all the analyzed regions, the percentages of exchanges between cryptocurrencies (such as Bitcoin to Monero or Tether) are low. In Latin America, they represent 35% of transactions, compared to 41% in Asia.
National and Cross-Border Transactions with Bitcoin
Transactions between national fiat money and Bitcoin account for 65% of trading volume and 63% of transactions for payment service providers globally. The rest are international or cross-border transactions.
The report indicates that domestic low-value transactions (less than USD 100) account for 44% of all service provider operations. However, domestic transactions of more than USD 1,000 represent 31%.
Contrarily, low-value cross-border transactions account for 30% and high-value transactions represent 45% of the total. The study states that “this contradicts anecdotes of people using cryptocurrency payment service providers to facilitate personal international payments, which would otherwise be too small.”
To distinguish different exchanges and payment service providers, the University of Cambridge considered that large companies are those with more than 40 employees. In most of the regions analyzed, exchanges or small payment service providers represent 70% of the total.
The study indicates that large providers conduct cross-border transactions of more than USD 1,000 sixty-five (65%) percent of the time, compared to only 8% of small transactions. Transactions between USD 100 and USD 1,000 represent 27%.
Cross-border transactions of less than USD 100, USD 500, or more than USD 1,000 occur almost as often at the smallest payment service providers, the study indicates. These providers mainly facilitate small payments in low- and middle-income countries (both domestic and cross-border).
Latin American countries follow this pattern of low-value transactions. Amid the crisis, countries such as Venezuela, Colombia, Mexico, and Chile are the most prominent for their Bitcoin trading volume.
By Alexander Salazar
