Last week’s brutal crash in cryptocurrency trading in China briefly shocked the entire market as bitcoin and altcoins plummeted after the announcement, but as with everything else crypto-related, the market jumped back when resilient traders discovered other ways to participate in the market.
Part of China’s goal of limiting citizens’ ability to trade cryptocurrencies seems to focus on preventing the use of cryptocurrencies and the growing decentralized economic (DeFi) ecosystem, but these maneuvers appear to have the opposite effect on the price of tokens and the protocol activity of the projects. Like Uniswap (UNI), dYdX has seen a boom since the start of the crash.
According to Chainalysis data, there has been a significant amount of regional Bitcoin (BTC) flows in East Asia, as indicated by the rising orange line in the chart below. This indicates that crypto holders in the region change assets in response to the strict regulations.
Regional flows of BTC. Source: Chainalysis
As Chainalysis says, “Assets tend to move within a region, possibly due to the preferences of local exchanges, but flows between regions often occur as a result of regulatory issues, geopolitical changes or large fluctuations in market prices.”
The lack of inflows from East Asia, along with cryptocurrency exchanges such as Huobi and Binance suspended services for Chinese residents, indicate that funds are being held in the region instead of on central exchanges.
About the topic: DEX derivatives dYdX surpasses Coinbase spot markets by volume among Chinese RD&D
Profit in the DeFi ecosystem
At the same time as this increased movement has taken place in East Asia, activity on decentralized exchanges such as Uniswap and decentralized derivative exchange dYdX has grown as traders in China seek a safe haven for their crypto activities.
Uniswap trading volume vs total revenue. Source: Token Terminal
DydX is a particularly useful data source because it is currently the most widely used decentralized derivative exchange, and demand has risen after regulators around the world left centralized exchanges with flexible KYC guidelines offering derivative services.
According to Token Terminal data, dYdX has reached the top five over the past week in several categories, including token price growth, total protocol revenue, paid commissions, price-to-sales ratios and price-earnings ratios. The stock exchange also came in among the top six in terms of total blocked value (TVL) increases.
Gross income versus total value registered for the day. Source: Token Terminal
A closer look at the available data also reveals that level 2 and tier 1 competitors Ethereum (ETH) have also made some of the biggest gains in the last week, led by landslide-based protocols such as Trader Joe and Pangolin. Like Phantom Network.
Among other things, recent data show that the decentralized financial ecosystem functions as originally intended, and gives cryptocurrency holders an uncontrolled way of acting outside the control and competence of authorities and financial regulators.