Kimchi Shrinks: Stablecoin Trading Volume Plunges 80% in South Korea
South Korea’s cryptocurrency market, well-known for its deal with retail spot buying and selling, is experiencing a noticeable slowdown.
The nation’s day by day stablecoin buying and selling quantity exceeded ₩1 trillion ($730 million) on the finish of final yr. Since then, it has shrunk to round ₩200 billion ($146 million) by June—an 80% drop in simply six months.
Why Did the Trading Volume Drop?
According to information submitted to lawmaker Park Sung-hoon of the People Power Party, the typical day by day home stablecoin buying and selling quantity was ₩238 billion in June. The National Assembly Research Service provided this data.
This determine aggregates the whole buying and selling quantity of US dollar-pegged stablecoins like USDT, USDC, and USDS. The information comes from South Korea’s 5 main crypto exchanges: Upbit, Bithumb, Korbit, Coinone, and Gopax.
Domestic stablecoin buying and selling quantity steadily elevated from ₩174.1 billion in July final yr to ₩304.1 billion in October and ₩638.1 billion in November. It then surged to ₩1.02 trillion in December.
However, the development reversed sharply this yr. Volumes fell to ₩923.8 billion in January, ₩879.4 billion in February, after which dropped to the ₩300 billion vary from March to May earlier than hitting the ₩200 billion vary in June.
Stark Contrast to Global Markets
Stablecoins are designed to keep up a secure worth pegged to a fiat forex just like the US greenback. Thus, they function a medium for fee and trade in the crypto market.
Therefore, a decline in stablecoin buying and selling quantity may be interpreted as a contraction of total funding, which additionally alerts a decline in buying and selling exercise.
Unlike world markets, South Korea‘s restricted use of stablecoins is cited as a purpose for the lowering buying and selling quantity. Globally, stablecoins are more and more used to speculate in crypto derivatives like perpetual futures and make real-world funds.
As a outcome, the worldwide stablecoin market cap and buying and selling quantity have been rising quickly this yr. However, cryptocurrency derivatives buying and selling is banned in South Korea.
Furthermore, bank card funds dominate the market, accounting for almost 70% of all fee transactions. This makes stablecoin-based funds a minor a part of the economic system.
Crypto Holdings and Trading Volume Also Fall
South Korea’s total cryptocurrency trading volume and domestic crypto holdings declined during this period. According to the Financial Stability Report printed by the Bank of Korea final month, the typical day by day home crypto buying and selling quantity was ₩3.2 trillion in June.
This was an 80% lower from ₩17.1 trillion in December final yr. Domestic crypto holdings additionally dropped from ₩121.8 trillion on the finish of January to ₩89.2 trillion by June.
The Bank of Korea said that home stablecoin development has lately slowed down as a result of sluggishness of the digital asset market.
The report additionally prompt that the “Trump impact”—the expectation of pro-crypto insurance policies—was robust at first of the yr however seems to have largely pale.
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