In South Korea, the cryptocurrency market has reached record highs for the first time in two years. This is due to the fact that the local fiat currency is now preferred by digital asset traders over others.
Based on a study carried out by blockchain company Kaiko during Q1 2024, the South Korean won emerged as the top fiat currency traded against digital assets, surpassing both the US dollar and the Euro in total trading volume.
Improving Macroeconomic Environment
According to recent studies, the trading volume on South Korean cryptocurrency exchanges reached an astounding 497 trillion won ($456 billion USD), surpassing the $455 billion USD volume on U.S. exchanges.
Instead, Euro trading pairs amounted to approximately $59 billion in total volume during the initial quarter of 2024, ranking third among all other pairings. This period concluded on March 31st.
In the recent quarter, other non-crypto currencies like the Turkish lira (TRY), Japanese yen (JPY), and British pound (GBP) recorded impressive gains of $50 billion, $49 billion, and $7 billion respectively. According to Kaiko, this market surge and the won’s exceptional performance can be attributed to two main factors: the enhancing economic conditions and the fierce competition among domestic exchanges in South Korea.
The report states that the enhanced economic situation and intense competition among Korean stock exchanges have significantly increased trading activity on these markets, reaching a two-year peak in early March. Furthermore, during the first quarter of 2024, the South Korean Won (KRW) exceeded the US Dollar (USD) in total trade volume for the first time.
Transaction Fee War in South Korea
In recent times, crypto exchanges based in South Korea have been battling it out to take the top spot. Among these, Upbit has emerged as the clear frontrunner since early 2021, holding a staggering 82% market share over the past three years.
In March, Bitcoin (BTC) surprised everyone by shattering its previous lows from 2022 and 2023, reaching an unprecedented new high of $73,000. This unexpected market surge led major digital asset trading platforms in South Korea, including Bithumb and Korbit, to launch aggressive promotions like zero-fee trading towards the end of 2023, in a bid to attract more users.
Those drawn to no-cost trading opt for these exchanges instead of Upbit, thereby lessening Upbit’s market hold.
In the time period after Bithumb initiated its no-fee campaign in late 2023, the exchange experienced a significant increase in market share, tripling in size. On the other hand, Korbit claimed only a 1% share of the South Korean cryptocurrency market in the year 2024.
Although Bithumb experienced an expansion in market share, they ended their zero-fee promotion in February, making users once again pay the regular transaction fees on the platform. According to Kaiko’s analysis, this decision might have been due to Bithumb’s financial struggles from the previous year, which resulted in a significant 60% decrease in revenue for 2023.
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2024-04-16 18:28