Kaiko Report: South Korea’s Cryptocurrency Market Hits Two-Year High in Q1, South Korean Won Overtakes USD on This Metric

According to data from Kaiko, the growing dominance of the South Korean won (KRW) is partly due to intense fee competition among South Korean cryptocurrency exchanges.

The South Korean cryptocurrency market has seen a recent surge in trading volume, reaching a high not seen in more than two years.

According to the Kaiko report, the first quarter of 2024 marked an important milestone as the cumulative trade volume of South Korea’s won (KRW) surpassed that of the U.S. dollar (USD).

Shifts in Competition and Market Dynamics

The surge in trading activity comes amid fierce competition among Korean exchanges and changing market dynamics.

Upbit is a major player in South Korea’s cryptocurrency space, having dominated since the beginning of 2021, with an average market share of 82% over the past three years.

However, especially during the recent bull market, the market landscape has become increasingly competitive. Competitors like Bithumb and Korbit have stepped up their efforts to gain market share, with Bithumb’s zero-fee policy launched in October 2023 having a particularly significant impact.

Despite a 60% drop in annual revenue in 2023, Bithumb tripled its market share within months of implementing its zero-fee strategy. Korbit maintains a relatively low market share, averaging less than 1% throughout 2024.

Strategies adopted by companies such as Bithumb led to a surge in trading volume, resulting in the Korean won’s cumulative trading volume surpassing that of the U.S. dollar in early March.

However, this achievement did not last as the South Korean won’s trading volume experienced a decline in early April. Nonetheless, Kaiko believes that Hong Kong’s recent approval of spot BTC and ETH ETFs could serve as a potential catalyst for a revival of market sentiment in the Asia-Pacific region.

Regulatory Review and MarketShift

Meanwhile, Uniswap Labs disclosed on April 10 that it had received a Wells Notice from the U.S. Securities and Exchange Commission (SEC). The announcement caused the UNI token price to drop by more than 16%, and trading volume surged by 3,000%.

In the United States, Coinbase expanded its market share, in contrast to Binance.US, which suffered a decline due to legal issues following an SEC lawsuit last June. Binance.US now has a market share of just 0.28%, a significant drop from its market share of over 30% last year.

Kaiko also reported that last week, the 90-day correlation between BTC and the US Dollar Index (DXY) fell to -0.24, hitting its lowest point in over a year.

The dollar has strengthened due to an unexpected surge in inflation and escalating tensions in the Middle East. However, unlike traditional safe-haven assets, BTC did not attract investor interest during this period and instead experienced declines along with other risk assets.

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