Crypto-Assets Activity around the World: Evolution and Macro-Financial Drivers
Erik Feyen, Yusaku Kawashima, Raunak Mittal
Abstract
On-chain crypto-assets transaction \n volumes have grown rapidly, particularly during the COVID-19 \n pandemic. Crypto-assets activity appears to be a global \n phenomenon, although it still remains modest relative to \n gross domestic product for most countries. Panel regressions \n across more than 130 countries show that the variation in \n countries’ monthly crypto volumes is mostly driven by \n globally relevant factors such as real U.S. longer-term \n inflation expectations, U.S. real Treasury yields, and gold \n and crypto-asset prices, rather than recent country-level \n macroeconomic developments. Cross-sectional regressions \n offer tentative evidence that crypto activity is higher in \n countries with higher information and communications \n technology adoption and higher reliance on remittances. \n Taken together, the findings shed new light on the drivers \n behind crypto activity and offer support to the notions that \n crypto-assets are perceived as a risk asset, a potential \n macro hedge, and a potential tool to support cross-border \n transactions. However, the results come with caveats: a \n significant portion of the sample period includes \n extraordinarily loose global financial conditions; the \n crypto volume data have a short history, rely on important \n limiting assumptions, and do not represent all crypto \n activity; and crypto-assets represent a fast-evolving, \n increasingly diverse asset class and industry.