The crypto market has been on a roller coaster in recent years. After the massive crypto market rally in 2021, the industry has run into many obstacles in the last year. A major obstacle is regulatory ambiguity with assets such as Bitcoin (BTC) recording considerable sell-offs. Despite this market downturn, there has been a massive growth in the influx of users entering the crypto space.
Crypto adoption is growing considerably throughout the world. In that context, market data shows that the number of crypto users had increased to 417.5 million as of 2023, which represents a year-over-year (YoY) growth of 36.88%. Hence, at least 112.5 million users have joined in the last year since there were 305 million recorded in 2022.
Asia is the undisputable leader having over 260 million users as of May 2023. This number represents an impressive 100% growth from 2022’s figure of 130 million. North America follows in a distant second with 54 million users, witnessing a growth of 3 million compared to the 2022 total number of 51 million.
Africa saw a drop of 28% from 53 million users to 38 million. European users also reduced from 43 million to 31 million.
A review of crypto ownership in relation to population per country shows that Thailand ranks first in 2023, with a share of 9.32%. India is second with 7.23%, followed by Brazil at 6.98%. Pakistan comes in fourth with 6.4%, while France makes it to the top five with 5.9%.
What Is Driving Crypto User Growth?
The increase in crypto user numbers can be accredited to many factors, including the fear of missing out (FOMO) scenario. During the crypto bearish market, these periods let users actively participate in the market, hoping to capitalize on possible gains from their investments.
Considerably, the market is still recording a bear phase from the highs of 2021. Moreover, the growing mainstream adoption and awareness of cryptos have played an integral role in attracting new users. The convenience and accessibility of crypto platforms and exchanges have made it quite easy for retail investors to join the market.
Additionally, the adoption of crypto as a kind of payment by businesses has also increased user growth. Concurrently, in emerging markets that have unstable economies and minimal access to traditional banking networks, cryptos have been adopted as an alternative and inclusive financial solution, underpinning adoption in these areas.
Despite the bearish outlook, the crypto industry, mostly led by Bitcoin, saw a temporary recovery in 2023, capitalizing on different incidents, such as the banking crisis. Amid such a crisis, the crypto space has been seen as a possible hedge against the continuing meltdown, which saw the collapse of huge lenders in the United States.
The perception also fueled interest and investment in cryptos as users sought alternative channels to safeguard their wealth amidst the banking havoc.
Growth Amid A Bearish Trend
Although the crypto industry is facing one of its most challenging phases, dominated by a persistent bearish trend, global user growth is highly incredible. The growth has happened amid many high-profile incidents like the FTX crypto exchange implosion and the Terra (LUNA) ecosystem crash, partially causing a reduction of trust within the industry.
On the flip side, the user count has also increased despite the ambiguous global regulatory outlook for cryptos. Different jurisdictions, such as the United States, seem to be intensifying a crackdown on the industry.
For example, the Securities and Exchange Commission (SEC) is now engaged in high-profile cases seemingly aiming to discourage investor involvement. The regulator has filed multiple lawsuits against Ripple, XRP’s parent company, and crypto exchanges Coinbase and Binance, claiming securities laws violations.
Analysts insist that regional crypto user trends are possibly going to be influenced by regulations. Asia dominates adoption, underpinned by the growing adoption of blockchain-based payment solutions in nations like Singapore, India, Japan, China, and South Korea, mainly within the banking, financial services, and insurance industries.
Effect Of Strict Regulations
Jurisdictions with strict regulations, including Europe and North America, are forecasted to lose crypto business to Asia-Pacific. This is also underscored by the fact that Asia recorded the highest year-over-year user growth rate.
One significant trend in usage shows that Europe saw a considerable drop. This plunge coincided with the area’s enactment of the Markets in Crypto Assets (MiCA) law. This law Strives to set up a legal infrastructure designed for the market of crypto and digital assets.
The legislation’s content has earned recognition as a global standard. Conversely, in Africa, the bear market’s aftermath is believed to have resulted in a decrease in user numbers, largely due to the region’s limited progress in regulatory advancements.
As the crypto industry aims to recover from the current downtrend, the total number of users will possibly increase, mostly led by jurisdictions that enact friendly regulations. Also, the user count may get a boost from a possible surge in demand for crypto among financial institutions and banks and untapped potential found in emerging economies.