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South Korean Crypto Exchanges Outpace Stock Market in Trading Volume Amid Bitcoin Rally

The recent Bitcoin rally has reignited a trading frenzy among South Korea’s crypto enthusiasts, with trading volumes on local exchanges surpassing those of the stock market last week. 

Reports from local media indicate that trading volumes on South Korea-based crypto exchanges reached a record-breaking 11.8 trillion won (KRW) on Sunday, equivalent to $9 billion based on the prevailing USD-KRW exchange rate. 

These figures exceeded the trading volume of the South Korean stock market on Friday, which stood at 11.47 trillion won ($8.7 billion).

The combined transaction amount of Korea’s five largest won markets contributed to this milestone, with Upbit leading the pack at 8.8 trillion won, followed by Bithumb at 2.7 trillion won, Coinone at 176.4 billion won, Gopax at 55.2 billion won, and Coinone at 32 billion won. 

Among the top five crypto markets on Upbit, the most actively traded pairs were Bitcoin (BTC), Space ID (ID), IQ Protocol’s IQ, Ox’s ZRX, and Shiba Inu (SHIB).

Rising Crypto Demand Shows Increased Risk Tolerance

Observers of the local market believe that the relatively higher volume in the crypto market reflects an increased risk tolerance among South Korean investors, especially following the recent Bitcoin rally. 

Ki Young-Ju, founder of on-chain provider CryptoQuant, explained that Koreans tend to favor high-risk, high-return investments due to their experience with a rapidly growing economy. 

As wealth disparity widens, more individuals are turning to alternative coins (altcoins) as their preferred choice over major assets like BTC or ETH.

Despite trading at a premium compared to global exchanges, Bitcoin, Ethereum, and other tokens maintain strong retail demand on Korean exchanges. 

The sustained high daily trading volume on Upbit since March, surpassing 60,000 BTC, further supports the evidence of retail inflow into the market.

As reported, Bitcoin has been commanding an average 10% price premium in South Korea compared to global exchanges.

This phenomenon is known as the Kimchi premium, which refers to the price difference of Bitcoin on local Korean exchanges compared to global platforms.

The price of #BTC on #upbit , South Korea’s largest CEX has hit 100M KRW(about $76K, kimchi premium ~= 7%).

The historic moment is made all the more historic because the South Korean government has yet to allow the BTC spot ETF to be bought and sold

— Henry | nonceClassic (@HenryK_Xel) March 11, 2024

South Korea Crypto Fans Could See Spot ETF Approvals

Last week, South Korea’s chief of the financial watchdog revealed that authorities are discussing the potential approval of spot Bitcoin exchange-traded funds (ETFs) in the country.

Lee Bok-hyun, governor of the Financial Supervisory Service, said in a recent radio interview that there are differing opinions among authorities. 

While some, like himself, hold a positive stance on virtual assets, others are more cautious. 

“Among authorities, I am one of those who are positive about virtual assets, while there are others who are wary, and we need to hear their opinions as well. We are internally discussing it.”

As of now, spot Bitcoin ETFs are not available for South Korean crypto investors. 

Meanwhile, South Korean police continue to wage “war” on crypto-powered drug trafficking, with officers in the capital Seoul making 452 arrests from June 2022 to December 2023.

As reported, police arrested three suspected drug dealers just this week. Officers also charged 445 buyers and four illegal “cryptoasset trading platform operators.”


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