South Korea's cryptocurrency market has recently seen a surge in trading volume, reaching heights not seen in the past two years.
According to a Kaiko report, the first quarter of 2024 marked an important milestone as the Korean Won (KRW) surpassed the US Dollar (USD) in terms of cumulative trade value.
Competition and changing dynamics
This surge in trading activity comes amid intense competition among Korean exchanges and changing market dynamics. Upbit, a major player in the South Korean crypto scene, has been in a historically dominant position since the beginning of 2021, with an average market share of 82% over the past three years.
But competition has increased, especially during the recent bull market. Rivals like Bithumb and Korbit have stepped up efforts to gain market share, and Bithumb's zero-fee policy, introduced in October 2023, has had a particularly big impact.
Bithumb tripled its market share in the months following the introduction of its zero-fee strategy, despite facing a 60% decline in annual revenue in 2023. Korbit maintains a relatively low market share, averaging less than 1% through 2024.
Bithumb and others' tactics contributed to a sharp increase in trade volume, with the result that the won exceeded the US dollar in cumulative trade volume in early March.
However, this achievement was not sustained as KRW's trading volume decreased in early April. Nevertheless, Kaiko believes the recent approval of spot BTC and ETH ETFs in Hong Kong is a potential catalyst for renewed market sentiment across the Asia-Pacific region.
Regulatory oversight and market changes
Meanwhile, Uniswap Labs announced on April 10 that it received a Wells Notice from the U.S. Securities and Exchange Commission (SEC). This announcement caused the price of the UNI token to drop by over 16%, while trading volume surged by 3,000%.
In the US, Coinbase increased its market share, in contrast to Binance.US' decline due to legal issues following an SEC lawsuit last June. Binance.US currently holds just 0.28% of the market share, a significant drop from his over 30% position last year.
Kaiko also reported that last week, the 90-day correlation between BTC and the dollar index (DXY) fell to -0.24, the lowest level in over a year.
An unexpected spike in inflation and rising tensions in the Middle East helped the US dollar strengthen. However, unlike traditional safe-haven assets, BTC failed to capture investor interest during this period and instead experienced a decline along with other risky assets.
