Bitcoin ETP’s, DeFi & Stablecoins are the key winners in crypto this year.

DeFi, or Decentralised Finance refers to a financial system built on blockchain technology, where transactions and assets are managed by smart contracts and decentralized applications (dApps).?

This innovative approach eliminates the need for intermediaries like banks, traditional financial institutions, and even governments, providing a more equitable, efficient, and transparent way to manage financial transactions.

Sounds rather ambitious right? You might think so, however, as the world becomes increasingly digital, many of us believe that the need for a more transparent, secure, and accessible financial system has never been greater. Remember those words, transparent, secure and accessible.

Back to the keyword in the title of this article, Growth. How has DeFi grown exactly across the various regions of the globe this past year? Thankfully our friends @Chainalysis recently released their 2024 version of the “Geography of Crypto Report” for our benefit and we can see below just exactly how regions which traditionally lack access (that word again) to traditional financial markets, products and services have seen a staggering growth YoY over 100% for both Latin America and Sub-Saharan Africa.?

Now I’m sure that most of you reading this, will instinctively think, yes all crypto metrics have grown this year vs the previous one since we’ve had a solid rally this year and saw BTC reach an All-Time High (ATH for short) above 73,000 USD in March 2024. Coupled with the launch of many new institutional products such as the eagerly anticipated Spot Bitcoin ETP’s (Exchange Traded Products) which drove a previously unheard of level of investment from institutional investors helping the Bitcoin Price along the way as can again be seen in this graph by our amigos over at Chainalysis.?

As remarked in the 2024 Geography of Crypto Report by Chainalysis “While it is not possible to fully isolate the impact of the launch of the U.S. bitcoin ETPs, there is broad recognition that the ETP contributed to a bullish market sentiment and increased institutional BTC exposure. This wave of demand has been attributed to ETPs’ abilities to simultaneously meet the needs of both retail and institutional investors, providing a familiar, regulated vehicle for gaining BTC exposure while avoiding the complexities of managing private wallets or navigating crypto-native infrastructure.”

Ok so, both old school retail investors who previously might not have invested in Crypto because they didn’t want the hassle of managing wallets, and institutional investors who had pretty strict rules as to which products they can invest in, all started to invest into this Spot BTC ETP’s and we saw an oversized increase in BTC price in Q1 2024 compared to the returns that were generated.

Cool story, like I said, most of you reading this will know this already, also, you might add, what has this got to do with DeFi growing? Well, nothing really, and that’s what’s so remarkable about the growth of DeFI this year. It’s highly unlikely that retail investors in Latin America or Sub-Sahran Africa were investing into Spot BTC ETP’s, but what about other markets such as MENA, Western Europe? Who is more likely to have access (that word again) to various tools, products and services to do so, how did DeFi grow in those regions compared to other methods?

Huh. DeFi outgrew CeFi YoY, in every region in the world except North America and Central, Southern Asia & Oceania. Ok, I didn’t expect that, especially since most of the mainstream news-grabbing headlines were around CeFI product launches, not DeFI ones, so how can this be explained? Once again our compadres at Chainalysis state that “ This growth likely drove an increase in altcoin activity in these regions, as shown in the above chart.”

This is an understatement to say the least. Not that I’m disputing that more altcoin activity was taking place, it was, but the Bitcoin Dominance Index (a tool used to calculate how much of the crypto market is dominated by Bitcoin vs altcoins) has stayed consistent throughout the year, hovering around 50% with a couple of small fluctuations here and there. This means that in order to compensate for the huge influxes in BTC coming from our North American retail and Institutional investors, the amount of altcoin trading would have had to have been equivalent to all the Bitcoin trading going on. This represents around 1,3 trillion USD by the way, no small feat (according to CoinMarketCap.)?

Now yes, let’s not forget that some highly popular altcoins are traded on Centralised Exchanges (CEX’s) and you don’t need to trade on a Decentralised Exchange (DEX’s) to trade these, but the reality is that for the small & mid cap altcoins you will have to. Additionally, DeFi isn’t solely characterized by DEX’s, DeFi products include and are not limited to various services such as the ability to take out loans, earn interest, oracle networks which provide users real time data on price and news as well as smart contracts, and governance tools to name a few.?

The cool cats over at Chainlaysis did some digging and found that according to the world bank only 49% of adults in Sub-Sahran Africa had access to a bank account. But with the advent of crypto, DeFi and especially Stablecoins, do they really need one? Before we go to the graph below, once again provided by the data dudes & dudettes at Chainalysis, how much would you guess? the average cost of sending a $200 remittance from Sub-Saharan Africa is? Think about what you would pay to send 200$ in remittance from your country, and how much you think “too much is.”

14% with Fiat. 14% if you send a 200$ remittance, essentially 28$. (or like 1 New York Katz Deli Sandwich - IYKYK.) Now look at the price of a stablecoin remittance, sure it's still relatively high around 6% but, its facts of life and figures such as these that highlight just how much access to DeFi products and services are improving people’s lives, driving that high YoY growth we’ve been looking at all along.

I could go so much deeper into DeFi in many of these countries, but in short, when it comes to the African continent, Nigeria is leading the way in terms of DeFi developments and usage, with over 31Bn USD received by DeFi services between Jul 23 and Jun 24. With Nigerians using DeFi services to take our loans, access interest and trade.

As you can clearly see, Nigeria is leading the way in Africa when it comes to DeFi, but many countries on this graph making significant progress in establishing crypto regulatory frameworks, I expect to see this trend continue to grow and a significant pace especially having closely worked at Outrun with some amazing Fintechs from Lagos to Cape Town who are at the forefront of innovation tailored to their local market needs.?

But you might say, Stablecoins in USD haven’t just proven popular in Africa, we know that Brazilians can buy USDT at various ATM’s. The Eurozone has launched a plethora of Euro backed stablecoins in the?

wake of the MiCA regulation arriving in full effect later on this year. Paypal even launched their own stablecoin to solve for normal everyday use on PayPal, clearly driven by demand from their customer base responding to the trio of issues that every day fiat remittances pose to end users being, access, transparency & cost. Countries like the UAE have made it legal for salaries to be paid in crypto, and of course, Stablecoins is a preferred method of payment as it removes the volatility threat posed by various altcoins.?

So there you have it, the real key winners of the year are all those involved in Bitcoin ETP’s and by extension, although to a lesser degree, anyone and everyone who invested in Bitcoin. Stablecoins saw their usage grow massively all while solving real world problems in countries where trust in local fiat currencies and their institutions is low. Finally, the DeFI world is growing massively and solving problems such as access and pricing in many different regions of the world, and the cool part of it all? It’s still only just the tip of the proverbial iceberg.?

Of course none of this would be possible without the bright minds at Chainlaysis, thanks to everyone who worked hard on putting their annual report together. Here at Outrun, we are really excited to be able to work with our partners and clients in this industry to tailor the next wave of products and services in line with the emerging trends, capturing real world opportunities and solving the financial needs of end customers one day at a time.

Thanks for reading this and please let me know who you think the real crypto winner of 2024 was in the comment section.?