January 15, 2021
Greg Cipolaro

A Note On Geographic Drivers of Returns

Earlier this week, we published a note examining the market forces that were at play during the correction on Sunday and Monday. We argued that price discovery primarily occurred in North American spot markets because of premiums and discounts to bitcoin trading on exchanges in various jurisdictions. In this research note, we zoom out and look at geographic drivers of crypto in the past using some new data capabilities as the result of our Digital Assets Data acquisition announced on Monday. These tools give us an even broader array of analytical capabilities and market intelligence to drive informed trading decisions and help our valued partners navigate this fast-moving asset class. Thanks to NYDIG's Kevin Kaltenbacher, CFA for spearheading the data analysis of this report.

Historical Backdrop

Bitcoin is a globally fungible asset that trades 24 hours a day, 7 days a week, 365 days a year. Throughout its history, various jurisdictions have been critically important for the building, adoption, and trading of bitcoin. While North America and the US have been critically important for much of bitcoin’s history, Asia has been the other dominant geography. The first major exchange during the early years, Mt Gox, was based in Japan. The 2013 rally was aided in large part by an influx of new China-based investors, who at times, drove prices to 30% premiums for CNY quoted BTC. In 2017, we saw a similar phenomenon occur for KRW quoted BTC as South Korea became a driving force in that rally. While bitcoin trading continues to expand to new geographies, this rally has not yet seen a new country take up investing in bitcoin en masse, like we did the previous two cycles. What we have, we have argued, is uptake from a new investors class, the US-based institutional investor.

A Look at Returns by Trading Session

To better understand the drivers of returns, we divided the day into 3 trading sessions by dominant waking hours: North America (9 a.m. – 5 p.m. ET), Asia (5 p.m. – 1 a.m. ET), and Europe (1 a.m. – 9 a.m. ET) and looked at cumulative simple returns during those hours. The following chart highlights those returns since 2015.It should come as no surprise that returns through the market peak in 2017 were dominated by trading during Asia hours. The subsequent drop after that peak appears to be mostly Asia-driven as well. Also, in mid-2019, when the price of bitcoin went from $3,400 to $13,000, Asia trading appears to be responsible for the move. However, it is the green line, North America, which appears to be the main driver throughout 2020. The following chart breaks down annual returns by geography and quarter. (Note: to convert session simple returns to quarterly/annual returns, add 1 to each quarter/year, multiply them together, and subtract 1.)

North America Takes Over the Driver’s Seat in 2020

If we look at the past 12 months, a new story emerges, one where North America has driven returns. This is something we have shown in previous reports by looking at premiums and discounts to locally trading bitcoin, but the phenomenon is even more apparent by looking at returns. Investors in North America and Europe are driving the lion’s share of returns while returns during Asia trading hours have trailed in 2020 and 2021.

Final Thoughts

The analysis we have presented here paints a clear narrative that the investors driving returns have shifted from Asia to North America over the past year. We are performing additional analysis that we think will be of help to our client base in understanding the changing market dynamics within the crypto landscape. We will publish a more in-depth analysis of market dynamics as a standalone report soon.


After a volatile few days, bitcoin ended up slightly on the week. Equity markets were mixed, with the S&P 500 down slightly and the Nasdaq Composite up slightly. Gold was down considerably on the week, falling 3.1%. Fixed income assets, real yields, and inflation expectations were largely unchanged on the week.


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