Bitcoin Trading Trends in South Korea

Bitcoin (BTC) trades at an expanding premium on Upbit, as South Korean traders seek protection from the weakening national currency. Traders bought BTC as the South Korean won fell to a 15-year low against the US dollar.

Bitcoin traded with a widening premium on Upbit, one of the leading South Korean exchanges. While a premium on the Korean won pair is not unusual, this time, the disparity is growing.

BTC traded at $94,574.92 on most spot exchanges. On Upbit, the price was $96,722.63, keeping a gap of more than $2,000. The Bithumb premium was lower, with BTC trading at $96,571.21. Other trading pairs remained within their usual range, with minimal fluctuation.

The South Korean won premium increased rapidly on worries about currency devaluation.
The Korean won markets make up just 1.78% of all BTC trading activity. More than 24.83% of trading is against the US dollar, while 51.46% is against USDT, with an intuitive dollar-based position.

Usually, the premium rises smoothly with the rest of the market, but the latest spike of the Korean won index signals a short-term rush to buy BTC. The Korean won slid more rapidly against the dollar from October onward, accelerating its decline and causing a shift to BTC as an offset.

Investors in South Korea flock to crypto in Q4

The Korean won has returned to levels not seen since the 2008 financial crisis, sparking worries about South Korea’s economy. The country is one of the key crypto hubs, where retail demand is high as a way to offset stagnant incomes. Based on recent data from the Bank of Korea, domestic crypto investors exceeded 15 million for the first time.

While South Korean investors have been highly active in previous bull cycles, the latest increase in activity started in the last months of 2024. Following the US elections and the accelerated losses of the won against the dollar, an additional 610K South Koreans made their first crypto purchases. As a result, roughly 30% of all South Koreans have invested in crypto coins.

Crypto investors used the top 5 centralized exchanges in the country: Upbit, Bithumb, Coinone, Korbit, and GOPAX. These exchanges are mostly closed to outside investors without a bank account in the country, which prevents international traders from easily arbitraging. Markets are also relatively conservative in listing new coins and tokens, so BTC continues to be an alternative investment.

South Korea added another layer of regulations under the Virtual Asset User Protection Act, which came into force in July. The new regulations enabled the country’s central bank to track the crypto market more closely, allowing the Bank of Korea to monitor the growth of crypto investors in the country for the first time.

According to Representative Lim Gwang-hyun of the Democratic Party of Korea, crypto markets are catching up to traditional stock markets in terms of volumes and retail activity. Volumes on South Korean virtual asset exchanges reached the equivalent of $100B in November, surpassing the country’s KOSPI and KOSDAQ markets.

Inflows to exchanges also accelerated in the past three months, demonstrating demand for risky assets with high potential returns. South Korean traders have increased inflows to centralized exchanges every month in the past year.

The trend accelerated in the past few weeks, following the declaration of martial law for two hours, raising questions about the country’s political stability. There were signs that crypto markets were not only catching up to stock markets, but investors were also shifting their funds from shares into digital coins. Additionally, the KOSDAQ index has been sliding, starting from 871 points in January and dropping to 675 points as of December 27.

Since tracking began, the number of new investors has grown on average by 100K users a month. Total holdings for South Korean investors were around 58 trillion won in July, rising to over 100 trillion at the end of 2024, based on the BTC rally to a series of records. In the second half of 2024, individual holdings on average were under $2,500, doubling to over $5,000 after the Q4 rally.

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