How do Western investors drive the expansion of the Bitcoin bull market step by step?

Original title: [ChainDD Exclusive] How does Western capital drive the expansion of the Bitcoin bull market step by step? ”

Written by: Song Song

In January, New York Digital Investment Group (NYDIG), an institutional Bitcoin investment firm, published a research article on "Geographical Drivers of Bitcoin Returns". NYDIG stated that Bitcoin's cumulative returns over trading time showed that its price gains from 2020 to 2021 were driven by investors in the Western world (Europe and the United States).

The agency divided the 24 hours of the day into three equal trading sessions: North America (9 am to 5 pm Eastern Time), Asia (5 pm to 1 am Eastern Time), and Europe (1 am to 9 am Eastern Time) to analyze the cumulative returns of Bitcoin.

While the article explicitly mentions the historical importance of Asian markets during Bitcoin price increases, it also emphasizes that the Western world has become the absolute driving force behind the Bitcoin bull market since the beginning of 2020.

As shown in the figure, in 2020, Bitcoin's returns during the North American and European trading sessions have steadily increased, with the cumulative return during the North American trading session reaching as high as 132% (calculated since January 1, 2020).

In 2021, the European trading session appears to have become a more important driver of Bitcoin returns. From January 1, 2020 to April 19, 2021, Bitcoin's cumulative return during the European trading session was 254%, while the cumulative return during the US trading session was 162%. This may be because the European trading session overlaps with the Asian evening trading hours and the US pre-opening trading hours.

The Asian trading session, on the other hand, had the opposite effect, with a cumulative return of negative 15% from January 1, 2020 to April 19, 2021.

NYDIG said Bitcoin's returns clearly show that Europe and the United States are key drivers of Bitcoin's rise, as it shows in the report that North American entities have accumulated a significant portion of Bitcoin's supply since January 2020.

North American Bitcoin Services Are Accumulating Bitcoin from Europe and Asia

As mentioned above, North American Bitcoin services have accumulated a large amount of Bitcoin over the past three months.

Chainalysis, a well-known American blockchain analysis company, tracks the geographical locations of various Bitcoin service agencies. Its data shows that American entities have accumulated a large amount of Bitcoin throughout the market cycle.

According to Chainalysis data, the net inflow of Bitcoin into U.S. entities was approximately 700,000 between mid-March 2020 and the end of 2020.

This trend continues in 2021. As shown in the figure above, in the past three months, North American Bitcoin service providers have received and accumulated nearly 50,000 Bitcoin net inflows from Western European and East Asian entities, of which more than 35,000 BTC came from Western Europe and more than 13,000 BTC came from East Asia.

From this, we clearly see that North American entities are strengthening their control over Bitcoin. Although reports of "China's Bitcoin dominance" are once again spreading like wildfire in the media, on-chain data shows that the "pendulum" is tilting towards the United States.

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