South Korean crypto exchanges see trading volume plummet by 88%

The South Korean crypto market is under severe pressure. The daily trading volume on the five largest won-based crypto exchanges has fallen by as much as 88% in a year, to approximately KRW 412.7 billion ($280 million) on 20 July. The downturn is hitting exchanges hard in their revenues and some parties are already resorting to selling their own crypto holdings to stay afloat.

Bitcoin is available at OKX and Bybit.

Dunamu and Korbit feel the pain the most

Upbit, by far the largest player in the South Korean market, falls under parent company Dunamu. That company reported a 55% drop in revenue and a 78% decline in operating profit for the first quarter. Those are heavy blows for an exchange that derives most of its income from transaction fees, because when volume collapses, profit soon follows.

Competitor Korbit goes a step further and sells its own crypto holdings to finance daily operations. According to ZDNet Korea, the exchange has sold crypto three times this year, including 15 Bitcoin and 60 Ethereum in early July for total proceeds of approximately KRW 1.6 billion ($1.08 million). Bitcoin is currently at $66.305, which means that the 15 BTC sold alone are worth over $994.000 at that price.

Structural pressure on the South Korean crypto sector

The situation in South Korea shows how vulnerable exchanges that are almost entirely dependent on trading volume are. When the market cools down and investors trade less actively, revenue evaporates rapidly. The five major won-based exchanges, including Upbit, Bithumb, Coinone, Korbit and Gopax, see their market share shrink further as retail investor enthusiasm declines.

It is a pattern that often appears after periods of high volatility and speculation: as soon as prices move less sharply, a large portion of retail traders drop out. For exchanges that have hardly any diversification in their business model, this creates immediate financial problems. Whether Korbit and other smaller players can sustain this without further sales or external financing remains to be seen.