The cryptocurrency market - France (2024)

1.2 The global cryptocurrency market dominated by Bitcoin

Global cryptocurrency market capitalization World, ****, in billions of dollars Source: ****

The global cryptocurrency market is exploding in October ****. Today, October *, **** more than ***,*** people hold more than $* million in cryptos, **% more than last year. Bitcoin millionaires, in particular, have literally doubled to **,*** individuals (***).

The crypto ultra-rich, the so-called centi-millionaires (***), have also risen by **%, to *** people. As for crypto billionaires, their number climbed **% to ** worldwide.

In short, we're witnessing a veritable Gold Rush *.*, with even traditional financial institutions getting in on the act, buoyed by the new crypto ETFs. Bitcoin, for example, hit a record high of USD **,*** last March, and the arrival of Bitcoin and Ethereum ETFs in the USA has injected a massive flow of institutional capital. Everyone is already gearing up for the next Solana ETFs that could land on Wall Street. We're clearly living in a new era for crypto: it's moving from the status of a"new toy" to that of an asset increasingly integrated into traditional finance.

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In ****, the global cryptocurrency market was characterized by several notable developments. Blockchain-based applications, particularly in the field of social media, experienced significant growth. Platforms such as friend.tech have led to the emergence of SocialFi (***), marked by a growing ...

1.3 A growing French cryptocurrency market

According to a study by Ipsos and KPMG for the Association for the Development of Digital Assets (***), despite a slight slowdown and major collapses such as that of crypto Terra in May and the FTX platform in November, interest in cryptocurrencies in France continues to grow. Data shows that **% of French people owned cryptocurrencies in ****.

Cryptocurrency owners France, **** - ****, in Source: ****

We can see an upward trend, since they were *% in ****.

Growth in the number of employees in the Web * sector France, ****-****, in Source: ****

For the year ****, the cryptocurrency industry in France represents *,*** jobs. It should be noted, however, that in France in ****, the number of jobs in the tech sector fell by **% so logically the web * sector absorbed part of this deficit.

The French companies contacted for this study support the idea that France and Europe should foster the development of strategic players in various sectors to maintain their European digital sovereignty. Among the sectors identified as priorities are transaction storage and analysis, as well as the cryptocurrency mining industry[***].

1.4 Bitcoin: an asset to have in your wallet

Bitcoin is distinguished from other financial assets by its decentralized nature and its unique role as a diversification instrument. This special status is based on several structural features that fundamentally differentiate it from traditional assets.

Firstly, the total quantity of Bitcoin in circulation is limited to ** million units, creating a scarcity comparable to that of precious commodities. By ****, around **.* million Bitcoins are already in circulation, leaving less than * million to be mined, further accentuating this perceived scarcity. This programmed supply constraint reinforces the thesis that Bitcoin could serve as a store of value similar to gold, especially against a backdrop of inflationary pressures.

In terms of performance, Bitcoin has shown exceptional resilience to the volatility of traditional markets, particularly during crises. BlackRock's report highlights Bitcoin's increasingly uncorrelated behavior with stock market indices, making it an attractive diversification asset for multi-asset portfolios. Its low correlation with the S&P *** or Nasdaq makes it particularly attractive in times of economic instability. Institutional investors see it as a means of protecting their capital against systemic risks, while benefiting from high potential returns.

Volatility, however, remains one of the asset's major challenges. Although Bitcoin has posted impressive annual returns over the long term (***), its brutal ...

1.5 An imminent "Bull run"?

At the time of writing: October *, ****, the prospects of a potential bull run in the cryptocurrency market are emerging through a convergence of macroeconomic, geopolitical, and financial factors. The US Federal Reserve's interest rate cuts, Donald Trump's pro-crypto strategies, China's monetary policy reformand the growing involvement of investment funds such as BlackRock, all point to an imminent surge. To better understand this dynamic, it is essential to understand the underlying mechanisms and initiatives that are driving this favourable environment.

*. The Fed rate cut: reallocation of capital to risky assets

The Fed's announcement of a *.*% rate cut on September **, **** represents a major strategic shift in US monetary policy. This reduction directly affects the profitability of government bonds and fixed-income securities, making these instruments less attractive to yield-seeking investors. As a result, they are reallocating their capital to riskier assets such as Bitcoin and other cryptocurrencies. This dynamic can be explained by a classic economic phenomenon: when rates are low, bond yields fall, creating a shift of capital towards assets with higher volatility to maximize return on investment. [***]

However, this decision has had a paradoxical short-term effect on cryptos due to thecarry trade. With lower rates, institutional investors borrowing at low rates ...

2.1 French interest in cryptocurrencies

In ****, despite a tense economic environment in France (***), awareness of crypto-assets remained solid.

While these conditions could have diverted investors' attention and influenced perceptions of new technologies, this was not the case for cryptos. After a sharp rise in **** (+* % points for cryptos, awareness of crypto-assets has stabilized: **% of French people have heard of them in ****. This stability can be explained by less intense media coverage since the end of ****, coupled with an already high level of awareness.

changes in awareness of crypto-assets France, ****-****, in Source: ****

Main obstacles to buying crypto-assets France, ****, in Source: ****

This chart shows that the main obstacle to buying crypto-assets in France in **** is disinterest (***). This trend indicates that, despite the high awareness of crypto-currencies, many French people remain wary or feel they cannot afford to invest in them. This highlights a need for financial education and more accessible offerings to attract a wider audience.

2.2 The typical profile of cryptocurrency holders

We can see that men are more represented than women among those who have invested, and even among those who are considering investing.

Breakdown of investors and interested parties by gender France, ****, % of total Source: ****

The adoption of crypto-assets in France reveals a significant inclination towards younger people: **% of cryptocurrency holders and **% of those considering buying belong to the under-** age bracket, a segment that makes up only **% of the total population. This trend fades with age, with only **% of ** - ** year-olds and *% of those over ** investing in cryptos. **% of former holders are over **. those interested in investing in cryptocurrencies are on average ** years old, younger than the average age of the French, while those reluctant are on average **.

Not all investors are wealthy, as the following graph shows:

Breakdown of investors by level of remuneration France, ****, in Source: ****

The chart shows a rebalancing in the profile of cryptocurrency investors in France. High-income households (***), which accounted for **% of holders in ****, are down to just **% in ****.

This reflects a marked decline in interest from this category, which was even more pronounced in **** at just *%. At the same time, low-income investors (***) have risen sharply, from **.*% to **%. This trend shows that crypto-currencies are now ...

2.3 How the French invest

We're seeing a degree of caution among French investors with regard to cryptocurrencies. Indeed, the volumes and proportions reserved for these investments remain low.

Breakdown of investors according to the proportion of their investment portfolio dedicated to cryptocurrencies France, ****, in Source: ****

In fact, an overwhelming majority of investors (***) invest less than **% of their investment portfolio in crypto-currencies, indicating a certain reluctance for this type of investment. The average share of overall savings invested in cryptocurrencies reaches **%, up from *% in ****. This increase is taking place despite the falling valuation of crypto-assets.

The breakdown by volume is as follows:

Breakdown of investors by volume invested France, ****, in Source: ****

Thus, the French are overwhelmingly investing small amounts in crypto-currencies. Based on current amounts and investments broken down by tranches, it is estimated that the French have invested between €** and €** billion in crypto-assets, corresponding to an average investment of between €*,*** and €*,***. However, these figures are global estimates and do not necessarily reflect the exact value of portfolios at the start of ****.

Among French cryptocurrency owners, **% carry out fewer than two transactions per month, contrasting with the image of a frequent speculative investor. This trend towards infrequent trading suggests a preference for more stable investment strategies ...

2.4 Investment strategies and preferred platforms

The financial interest in acquiring crypto-assets is clearly established, reinforcing the idea that the purchase of crypto-assets is primarily motivated by investment objectives rather than ideological convictions or a need for immediate use, a situation often observed in crisis economies or countries in conflict.among crypto-asset holders, investment is primarily motivated by the search for yield, both in the short term (***). A third investment motive lies in the belief that crypto-assets can offer protection against inflation, mentioned by **% of holders.

Crypto-asset holders often focus on an investment strategy geared towards security and the long term, rather than being driven by short-term volatility. This approach is evidenced by the year in which crypto-assets were acquired, with a significant proportion of holders having invested before the COVID-** crisis (***), accounting for over **% of respondents with valuations that were low compared to those at the start of ****.

Other motivations for investing in digital assets include:

distrust of banks, cited by **% of holders ; the desire for confidentiality in transactions, cited by **% of holders; the ease of transferring funds internationally, an advantage for *% of holders.

There are some new trends regarding the channels favored by the French for acquiring crypto-assets. In particular, crypto-asset holders often have several ...

3.1 Explanatory diagram of cryptocurrency transactions

To explain how a transaction involving cryptocurrencies works, let's take Bitcoin as an example.

Source: ****

The cryptocurrency market is driven by several types of key players:

end users: they carry out transactions, buying or selling, and store their cryptocurrencies in wallets, which can be digital (***) ; miners: these players support the network by validating transactions and creating new blocks in the blockchain, receiving rewards in the form of cryptocurrencies in return; digital wallets: these provide users with the means to store and manage their cryptocurrencies; exchange platforms: these facilitate the exchange of cryptocurrencies either between themselves, or against traditional currencies such as the dollar or euro.

In addition, the market is also overseen by regulators such as:

the SEC (***): in the United States, the SEC oversees securities and exchanges to ensure their legality and fairness ; the ECB (***): the ECB plays a role in overseeing European payment systems and has an interest in regulating cryptocurrencies within the EU; the FCA (***): in the UK, the FCA regulates financial firms to ensure consumer protection and maintain the integrity of the financial market.

These bodies seek to ensure financial stability, prevent fraud and abuse, and guarantee investor protection in the field of cryptocurrencies[***].

3.2 Crypto-asset mining

Crypto-asset mining is the process by which transactions are verified and added to the blockchain by solving complex cryptographic problems using specialized hardware. This activity, which is often rewarded by the creation of new units of mined currency, relies on a mechanism known as proof of work.miners, in competition with each other, seek to be the first to solve these cryptographic problems in order to be able to register a new block of transactions in the blockchain and thus obtain the associated reward. To optimize their chances of success and reward, miners frequently group together in consortia, called mining pools, where gains are shared between participants[***].

To do this, miners deploy a large fleet of computers and keep them running at full speed continuously. for example, the largest Bitcoin factory in the United States is located in Texas and uses **,*** computers. This factory, owned by Whinstone and scheduled for completion in ****, consumes the equivalent of half a nuclear reactor, i.e. a capacity of *** megawatts[***]. Bitcoin mining plants require large amounts of energy, which is why China is emptying itself of its mining plants in ****, due to the pressure they were putting on the country's coal-fired plants.

Ranking of countries ...

3.3 Other players in the cryptocurrency industry

Leading cryptocurrency exchange platforms offer buying, selling and trading services for a variety of digital currencies. Here are some of the most widely recognized:

Binance :

Binance, founded in **** by Changpeng Zhao, is one of the world's largest cryptocurrency exchange platforms. It boasts a wide selection of cryptocurrencies, competitive transaction fees, and advanced features such as margin trading and futures. Binance is also renowned for its ease of use, making the platform accessible to beginners, while offering sophisticated tools for experienced traders. Security is a strong point, with measures such as two-factor authentication. In addition, Binance offers educational resources through the Binance Academy, reinforcing its commitment to educating users about cryptocurrencies and blockchain.

Coinbase :

Coinbase, founded in **** by Brian Armstrong and Fred Ehrsam, is one of the most popular cryptocurrency exchange platforms, particularly appreciated for its ease of use, making it ideal for beginners. Based in the USA, it is known for its strict regulatory compliance, offering a secure platform for cryptocurrency trading and investment. In addition to its user-friendly interface, Coinbase offers a variety of cryptocurrencies and focuses on educating users through resources and learning tools on blockchain and cryptocurrencies.

Kraken :

Kraken, established in **** by Jesse Powell, is a cryptocurrency exchange ...

3.4 Cryptocurrency wallet providers

Cryptocurrency wallet providers play a crucial role in the digital asset ecosystem. They offer secure storage solutions for cryptocurrencies, enabling users to manage and secure their private keys, which are essential for accessing and transacting with their digital assets. These wallets can take different forms:

software wallets: they can be cloud-based, accessed via a web browser, or be desktop or mobile applications. These wallets are convenient, but often less secure than hardware options, as they remain connected to the Internet ; hardware wallets: these are physical devices that store private keys offline, providing an extra layer of security because they are not exposed to online threats. They are considered a form of cold storage; paper wallets: these contain printed information, including public and private keys, and are also a form of cold storage.

In France, as in most countries, the exact number of wallet providers is difficult to determine due to the constant emergence of new companies and the globalized nature of the market. However, some players are well-established and internationally recognized, including :

Ledger:

Based in France, Ledger is one of the world leaders in the production of hardware wallets for cryptocurrencies. Its flagship products, the Ledger Nano S and Ledger Nano ...

3.5 Who owns Bitcoin?

Today, the total market capitalization of Bitcoins in circulation is around **.** million BTC, or almost **% of the planned total supply of ** million BTC. This means that there are still around *.** million Bitcoins to be mined before the maximum ceiling is reached.this programmed scarcity and the gradual reduction in new Bitcoins coming onto the market, known as halving, reinforce the deflationary nature of Bitcoin, strongly influencing its price and the value perceived by investors.

Distribution of Bitcoins worldwide World, ****, in Source: ****

This graph shows the current distribution of Bitcoins worldwide. Individuals hold the majority with **% ofthe total supply, underlining their crucial role in the ecosystem. However, a significant **.*% corresponds toirreversibly lost Bitcoins, reducing the actual supply in circulation. Companies, funds/ETFs and governments own *.*%, *.*% and *.*% of thetotal respectively, showing their growing but still limited involvement. Finally, around *.*% of all Bitcoins have yet to be mined, representing the last reserves available for the future.

The ** companies with the most Bitcoins World, ****, in thousands Source: ****

In this chart, * of the ** companies are American, with Microstrategy by far the biggest Bitcoin holder among them, with ***,*** BTC, well ahead of the others. The second largest, Marathon Digital, holds just **,*** BTC, followed by Tesla with *,*** BTC. ...

3.6 A fragmented and competitive sector

Size of Web * companies France, ****, in Source: ****

The KPMG and IPSOS report points out that, despite this predominance of small structures, **% of Web* companies in France are already offering their services internationally, demonstrating a surprising capacity for global deployment. This is because digital technologies and the cross-border nature of blockchains enable even the smallest companies to quickly reach a global audience.

In an effort to define: Web* is the next generation of the Internet based on blockchain, aiming to decentralize platforms to give users more control over their data and transactions. It uses technologies such as smart contracts to create decentralized applications (***) and enable the direct exchange of value without intermediaries. This contrasts with Web*, dominated by large, centralized companies, and promises greater transparency and autonomy for users.

However, this international openness also exposes them to fierce competition, particularly from foreign industry giants benefiting from more favorable jurisdictions and more stable funding.

What's more, with the crisis of confidence caused by the bankruptcies of major players such as FTX, and the fall in cryptocurrency valuations, these small structures are the first to be hit in turbulent times.

In ****, this fragility was reflected in a reduction in the number of employees in ...

4.1 Cryptocurrencies at all prices

Numerous platforms inform us about the prices and variations of the various cryptocurrencies. For this section, the date is October **, ****

We can see that the different cryptocurrencies have very different prices, with Bitcoin having a price of over $**,***, while a Doge is worth $*.*. Prices also vary between different exchange platforms.

On Bitcoin exchanges, for example, there are sometimes significant differences, sometimes exceeding **% of the value. Arbitrage makes it possible to limit these differences, but not as much as expected, mainly due to the transaction times and associated costs that hamper this activity, often carried out by trading-bots. A notable example of this gap can be found between the Bitcoin-Central and Mtgox exchanges, which is due to Mtgox's slowness in crediting a euro account and the high fees for an international withdrawal from Japan (***)[***].

4.2 Cryptocurrencies subject to wide fluctuations

The prices of the most popular cryptocurrencies fluctuate enormously, and their trends vary greatly depending on the crypto-asset. In this section, we've grouped together the prices of the three most popular cryptocurrencies: Bitcoin,Ethereum and Tether.

Bitcoin price:

Bitcoin price World, **-**** - **-****, in $ thousands Source: ****

As far as Bitcoin is concerned, we can see a fluctuation in the high value recorded, starting at $*,***.** on **/**/****, reaching a peak of $**,***.** on **/**/****, before falling back to $**,***.* on **/**/****. Significant variations are to be noted throughout this period, with, for example, a rapid increase between May and June ****, another between January and April ****, and notable declines during June **** and September ****. Recently, a new ATH (***) was reached by BTC in March **** at a value of $**,***.

Ethereum prices:

Ethereum price World, **-**** - **-****, in milli Source: ****

Ehereum's lowest value, $***.*, is recorded in December ****. The highest value, $*,***.*, is recorded in November ****. Values fluctuate throughout this period, with several peaks and troughs. For example, there is a sharp peak in May **** at $*,***.*, followed by a dip in June **** to $*,***.*. In general, values appear to fall slightly after November ****, with a few exceptions. For example, in March ****, the value rises to $*,***.*, but then declines in April and May ...

4.3 Cryptocurrency wallet offerings

Cryptocurrency wallet platform prices vary depending on the type of wallet you choose. In general, there are two main categories of wallets: software (***) wallets . Here's a general overview of the costs associated with each:

Software (***) portfolios:

Most software portfolios are free. They can take the form of mobile applications, desktop programs or browser extensions. Platforms offering this type of service include Exodus, Electrum, MyEtherWallet and MetaMask.

Hardware (***) wallets:

Hardware wallets are physical devices designed to store cryptocurrencies securely. They are typically purchased for between $** and $***, depending on functionality and brand. Ledger and Trezor are the world leaders in hardware wallets, and the prices of their most popular wallets are shown in the table below.

5.1 Taxation rules

Taxation of capital gains on the sale of cryptocurrencies

When it comes to the taxation of cryptocurrencies in France, the rules are distinct depending on the frequency of transactions. If sales of cryptocurrencies such as Bitcoin are commonplace, they are taxed as industrial and commercial profits (***).

According to Article *** VH bis of the French General Tax Code, annual capital gains are taxable if total sales exceed *** euros. These gains are then subject to a single flat-rate withholding tax of **%, comprising **.*% for income tax and **.*% for social security contributions.

It's important to note that disposals in exchange for legal tender are taxable, as are purchases of goods or services with cryptocurrencies, but not exchanges between cryptocurrencies. Taxpayers must declare the total capital gain (***) for the year in their annual tax return, providing details of the transactions carried out.

For more information and for the declaration, taxpayers can refer to the"cessions mobilières" section on impots.gouv.fr and use form n°****, accompanied by its notice, to declare capital gains or losses on disposals of digital assets.

Taxation of cryptocurrency mining activities:

In France, cryptocurrency mining is classified for tax purposes in the category of non-commercial profits (***) in its section BOI-BNC-CHAMP-**-**-**-**, ...

5.2 Macroeconomic regulations

European Union MiCA Regulation: (***)

MiCA Regulation (***), and incorporates measures against money laundering by requiring identity checks and the reporting of suspicious transactions. [***]

Blocking a central bank currency: (***)

The Central Bank Digital Currency (***) ban in the U.S., passed by the House of Representatives, is designed to prevent the Federal Reserve fromissuing a central bank digital currency, not least because of concerns about the monitoring and control it could exert over private transactions. The ban, backed by Republicans, is seen as a way to protect innovation in the crypto sector and limit the power of authorities over decentralized transactions. [***]

6. Segmentation

• Revolut
• Exodus Wallet
• MetaMask
• Ledger
• Trezor
• N26
• Fortuneo
• Hello Bank !
• Bforbank
• Lydia
• Binance
• Coinbase
• Kraken
• eToro
• Flowdesk