South Korea has emerged as one of the most active retail cryptocurrency markets globally. According to data from the Korea Financial Intelligence Unit (KoFIU), approximately 6 million South Koreans—over 10% of the country’s population—were investing in digital assets by mid-2023. This significant adoption rate highlights a deeply ingrained culture of crypto trading, largely centered around domestic centralized exchanges (CEXs). In this analysis, we explore the unique characteristics and behavioral trends of South Korean investors by examining key data from the nation's top platforms: Upbit, Bithumb, Coinone, and Korbit.
Declining Global Volumes, Rising Korean Market Share
Despite an overall decline in global cryptocurrency trading activity since early 2023, South Korean exchanges have strengthened their relative position in the international landscape.
- Global slowdown: Centralized exchange volumes peaked in March 2023 and have trended downward since, mirroring reduced market volatility. Bitcoin prices remained relatively stable between $27,000 and $28,000 from late Q1 to late Q3, contributing to lower speculative activity.
- Korean resilience: While Korean exchanges also experienced a dip—from a high of $45 billion in February to $23 billion in May—volume rebounded sharply, reaching $37 billion in July. This recovery outpaced many global peers.
- Growing influence: Compared to Binance, the world’s largest exchange, South Korea’s four major platforms now account for around 10% of its trading volume. Notably, they have consistently outperformed Coinbase in volume during several periods, underscoring their growing international relevance.
- Market share expansion: The combined market share of Upbit, Bithumb, Coinone, and Korbit relative to Binance rose from 7% in March to 16% in September. This doubling reflects increasing investor engagement within the domestic ecosystem.
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Upbit’s Dominance in the Korean Market
Upbit stands as the undisputed leader in South Korea’s crypto exchange landscape.
- Market leadership: In February 2023, Upbit recorded $36 billion in trading volume, capturing about 80% of the domestic market. Even during a temporary dip to 70% in August, it quickly rebounded, maintaining consistent dominance.
- Competitor positioning: Bithumb holds a solid second place with 15–20% market share. Coinone follows with 3–5%, while Korbit accounts for less than 1%, indicating a highly concentrated market structure.
- Reaction to Ripple news: In July, positive developments in Ripple’s legal battle with the SEC triggered a surge in XRP price—up 80% on July 13—which fueled trading activity across Korean exchanges. Combined volume jumped from $27 billion in June to $37 billion in July, a 37% month-on-month increase, demonstrating how regulatory news can rapidly influence local markets.
Bithumb’s Zero-Fee Strategy: A Short-Lived Boost?
In early October, Bithumb launched a zero-fee trading policy in an aggressive move to gain market share.
- Initial success: The strategy led to a noticeable spike in trading volume, pushing Bithumb’s market share above 20% briefly.
- Fading impact: However, the effect was short-lived. Volume and market share reverted to pre-policy levels within weeks, suggesting that cost alone isn’t enough to retain traders long-term.
- Sustainability concerns: Eliminating trading fees removes a core revenue stream. While such promotions can drive short-term growth, their long-term viability remains questionable—especially in a market where users also value platform security, liquidity, and product diversity.
Upbit vs. Coinbase: Contrasting Investment Cultures
A comparison between Upbit and Coinbase reveals stark differences in investor behavior across regions.
- High-risk, high-reward preferences: On Upbit, altcoins dominate trading volume despite Bitcoin (BTC) and Ethereum (ETH) being minor contributors. This reflects a strong appetite among Korean retail investors for high-potential altcoins, even with elevated risk profiles.
- Institutional vs. retail focus: In contrast, Coinbase sees over 85% of its volume driven by institutional traders (per its Q2 shareholder letter). These investors favor large-cap assets like BTC and ETH for portfolio stability, aligning with global macro strategies rather than speculative plays.
This divergence underscores how regional investor demographics shape exchange dynamics.
What Cryptocurrencies Do Korean Investors Favor?
Analysis of trading activity during the third week of October revealed distinct local preferences:
- Top performers: Loom Network (LOOM) led with 62% of its global volume occurring on Korean exchanges. eCash (XEC) followed at 55%, Flow (FLOW) at 43%, Stacks (STX) at 37%, and Bitcoin SV (BSV) at 34%.
- The LOOM surge: Starting September 15, LOOM’s price rose nearly tenfold in one month—reaching 686 KRW—without clear fundamental catalysts. It briefly entered the global top 100 by market cap before crashing to around 140 KRW by mid-October.
- Gaduri effect: When FLOW suspended deposits and withdrawals on October 14, its price and volume spiked on Upbit. With cross-exchange arbitrage blocked, localized demand drove prices higher—a phenomenon known locally as “Gaduri.”
- Sustained interest: Unlike fleeting trends around LOOM or FLOW, tokens like Stacks and eCash maintain steady interest on Korean platforms regardless of global sentiment, indicating enduring local demand.
Deep Dive: Upbit’s Unique Ecosystem
Upbit hosts a distinctive set of assets often referred to as “Kimchi coins”—tokens primarily traded within South Korea.
- Exclusive listings: Steem Dollars (SBD), Moss Coin (MOC), and Hippocrat (HPO) see 100% of their global trading volume on Upbit. Others like Sentinel Protocol (UPP), Aha Token (AHT), and Groestlcoin (GRS) are also predominantly traded there.
- Low mainstream coin activity: Despite global popularity, major cryptocurrencies like BTC, ETH, and MATIC show relatively low trading volume on Upbit. This suggests a market shaped more by local sentiment than global trends.
- Regionalization of crypto markets: The uniqueness of Korea’s market highlights the need for blockchain projects to adopt localized go-to-market strategies rather than relying on one-size-fits-all global approaches.
Deposit & Withdrawal Trends: Why Tron Dominates
User behavior extends beyond trading—deposit and withdrawal patterns reveal further insights.
- Tron over Ethereum: In the past week, Tron-based transactions for deposits and withdrawals on Upbit outnumbered Ethereum-based ones by 5x.
- Cost efficiency drives adoption: High gas fees on Ethereum make it less attractive for frequent transfers. Tron offers faster speeds and lower costs—critical for users moving funds between exchanges.
- Data confirms trend: Coinmetrics reports over 2 million daily USDT transfers on Tron versus ~100,000 on Ethereum, highlighting Tron’s dominance in simple value transfer use cases.
- Exchanges as gateways: The preference for quick transfers suggests many Korean investors use crypto not for DeFi or dApps but as a bridge between domestic and international exchanges—especially to access derivatives or margin trading unavailable locally.
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Frequently Asked Questions
Q: What percentage of South Koreans invest in cryptocurrency?
A: Over 10%—approximately 6 million people—as of mid-2023, according to KoFIU data.
Q: Which exchange dominates the South Korean market?
A: Upbit leads with around 80% market share, followed by Bithumb at 15–20%.
Q: Why do Korean investors favor altcoins?
A: Local retail traders exhibit a high-risk appetite and are drawn to speculative altcoins with potential for rapid gains.
Q: What is the “Gaduri effect”?
A: It occurs when deposit/withdrawal suspensions prevent arbitrage, causing localized price spikes on Korean exchanges due to isolated demand.
Q: Why is Tron popular for transfers in Korea?
A: Low transaction fees and fast processing make Tron ideal for moving funds between exchanges compared to higher-cost networks like Ethereum.
Q: Are Kimchi coins available globally?
A: Most are listed exclusively or primarily on Upbit and see minimal trading outside South Korea.
Final Thoughts: A Market With Its Own Rules
South Korea’s crypto market operates under unique dynamics shaped by regulatory frameworks, investor psychology, and platform-specific policies. From Upbit’s dominance to the popularity of niche altcoins and the strategic use of low-cost networks like Tron, Korean traders have carved out a distinct identity in the global digital asset ecosystem.
For global projects aiming to expand into Asia, understanding these localized behaviors is essential—not just for compliance but for meaningful engagement.
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