The Middle East and North Africa region is the fastest-growing cryptocurrency market in the world, accounting for 9.2 per cent of global digital currency transactions from July 2021 to June 2022, according to a report by blockchain data platform Chainalysis.
Global crypto adoption levelled off
Individual investors in the MENA region received $566 billion in cryptocurrencies during the period, an annual increase of 48 per cent, Chainlysis said in its 2022 Global Crypto Adoption Index, which was dominated by emerging markets.
Global crypto adoption levelled off after growing consistently since mid-2019. However, the research found it has remained well above its pre-bull market levels in 2019.
In Turkey and Egypt, fluctuating cryptocurrency prices have coincided with rapid fiat currency devaluations, strengthening the appeal of crypto for savings preservation. The Turkish lira has inflated by 80.5 per cent in the last year; the Egyptian pound has weakened by 13.5 per cent.
Bitcoin plunged from a record high of about $68,000 last year to trade at around $19,928, while the cryptocurrency sector’s market capitalization has fallen below the $1 trillion mark. According to analysts, the sector’s rollercoaster ride is far from over, dragged down by this year’s equity bear market, global economic uncertainty, higher interest rates, and a sharp rise in the cost of living around the world. Long-term cryptocurrency holders have continued to hold through the bear market. While their portfolios have lost value, those losses aren’t locked in yet because they haven’t sold, Chainalysis said. It added that on-chain data suggests those holders are optimistic the market will bounce back.
“Users in the lower middle and upper middle-income countries often rely on cryptocurrency to send remittances, preserve their savings in times of fiat currency volatility and fulfil other financial needs unique to their economies,” Chainalysis said.
Chainanalysis and Grauer about MENA
“These countries also lean on Bitcoin and stablecoins more than other countries.”
Turkey was the most prominent cryptocurrency market in the Mena region, with its citizens receiving $192bn. However, the report said this represented slower yearly growth of 10.5 per cent compared with other countries in the area. Meanwhile, Egypt was the MENA region’s fastest-growing cryptocurrency market, having recorded 221.7 per cent growth in transaction volumes annually. Saudi Arabia also showed strong potential as deal volumes grew by 195 per cent, said Chainalysis. “In Egypt, digital currencies are being used as a means of savings preservation. Cryptocurrencies are an attractive means of protection again currency devaluation,” said Kim Grauer, director of research at Chainalysis.
“Also significant in the country is the use of cryptocurrency for remittances — the country’s national bank has already begun a project to build a crypto-based remittance corridor between Egypt and the UAE, where many Egyptian natives work.” Lebanon was ranked third in the MENA region in terms of cryptocurrency transaction volumes, which rose by an annual 120.9 per cent, followed by Morocco (120.8 per cent), the UAE (37.2 per cent), and Turkey (10.5 per cent). The index findings showed that Emirates recorded $38bn in cryptocurrency activity in the time frame compared with $28bn in the previous year. The exceptional levels of grassroots cryptocurrency adoption in Morocco seem to be tied more to the government’s newly permissive digital asset stance than to any particular macroeconomic tailwinds, the report said. “Adoption in the UAE is driven by the country’s clear ambitions of positioning itself as a global crypto hub,” Ms Grauer said. “Government support, forward-focused regulations, mechanisms for consumer protection, and support for the establishment of crypto businesses are all driving the adoption of cryptocurrencies and Web3 technologies in the country.”
