(Our regular analysis of the wild world of cryptocurrencies)

By Jihoon Lee and Jaspreet Kalra

SEOUL/MUMBAI, March 5 (Reuters) - Bitcoin's runawayrally is being driven by investors in Asia.

Traders in South Korea, China and other Asian countries areresponsible for roughly 70% of bitcoin trading volumes, muchlike they were in 2021 when bitcoin last hit such heady highs,according to crypto exchange data from The Block.

Asia accounted for $791 billion of the $1.17 trillion worthof bitcoin traded in February, with North American investorslagging way behind with $113 billion, broadly reflecting a trendseen since November, the data shows.

In China, FOMO has gripped many small investors frustratedwith an anaemic stock market. On popular messaging app WeChat,searches for "bitcoin" jumped 12-fold in February.

"I want to buy some bitcoin at a good price and hold," MiaWang, a finance industry employee based in China's easternprovince of Zhejiang, told Reuters. "It has jumped a lot and isexpensive now, but I worry it won't have any correction."

Bitcoin is trading at around $65,000 - close to its recordof $69,000 - after an eye-popping 148% rise since early October,primarily driven by U.S. regulators approving spot bitcoinexchange-traded funds (ETFs). BlackRock's iShares bitcoin trusthas been a major beneficiary of such investment flows.

Traders have also poured into the world's biggestcryptocurrency ahead of April's "halving" event, which couldreduce supply and push prices up. Supply of bitcoin is limitedto 21 million, of which 19 million tokens have already beenmined.

The legality of trading and owning of bitcoin varies acrossAsian jurisdictions, ranging from Japan which has comparativelyliberal regulations to China where there's a ban. Spot bitcoinETFs are banned in South Korea, but local brokers offer easyaccess to bitcoin futures ETFs.

KOREA GOES BIG ON BITCOIN

South Korea commands a 10% share of the bitcoin cashtokens and listed futures markets, estimates Hong Song-uk, acryptocurrency analyst at NH Investment & Securities.

South Koreans have made a net investment of $23.4 million inthe U.S.-listed 2X Bitcoin Strategy ETF this year,compared with $25.1 million in all of 2023, according to theKorea Securities Depository. In February, they also invested$6.89 million in Proshares Bitcoin Strategy ETF.

"Because trading of bitcoin ETFs has been banned here, moreand more Koreans are buying bitcoin ETF futures, which ishelping with its pop now," said Hong.

Bitcoin trading volumes on Upbit roughly trebled to 67,000coins last week versus the previous week, the South Koreanexchange said.

Yet U.S.-based exchanges such as Coinbase, Bitstampand Binance, which operate in some Asian markets, continue tohave the biggest share of global volumes at 50%, according toresearch firm Kaiko.

Hong Kong has decriminalised crypto trading over the pastyear, while allowing bitcoin ATMs and shops to cater to smallinvestors and even offshore Chinese financial institutions.

The city's largest bitcoin futures ETF, managed by CSOPAsset Management, has seen its assets under management swellfive-fold in the past five months to over $100 million.

There is also huge interest in India, where several localcrypto exchanges operate legally, but more trading is done onoffshore exchanges such as Binance and KuCoin which do not levythe 1% transaction monitoring tax that local operators do.

Between July 2022 and July 2023, Indians traded crypto worth350,000 crore rupees via offshore crypto platforms, accountingfor more than 90% of the total crypto trading volume by Indians,according to estimates from the Esya Centre, a local think-tank.