South Korea is witnessing a significant downturn in its crypto trading activity, reaching a two-year low with volumes falling below 10 trillion won, or approximately $6.7 billion, a threshold not breached since September 2023. This decline comes on the heels of a severe drop in the nation's stock markets, highlighting a troubling trend for investors in both sectors.
The measure of trading volume encompasses the total value transacted on various exchanges over a specified period, and recent statistics indicate a dramatic cooling in the market. The five major fiat exchanges in South Korea Upbit, Bithumb, Coinone, Korbit, and Gopax recorded a combined trading volume of around 9.97 trillion won ($6.65 billion) for the week of July 3 to July 10. This figure represents a staggering drop of 25.75% from the previous week's total of 13.4 trillion won ($8.9 billion).
In fact, this marks the fifth consecutive week of declining volumes, a sign of diminishing retail investor interest. The current trading volume is approximately 43.5% lower than the levels observed in early June, according to WuBlockchain. The downward trend reflects a broader withdrawal from speculative trading by retail investors, raising concerns about the future of South Korea's crypto landscape.
Factors exacerbating this decline include structural challenges within the industry. During the first quarter of 2026, Bithumb, one of the leading exchanges, experienced a significant drop of over 30% in its trading volume. Additionally, an operational mishap at Bithumb earlier this year shook investor confidence, leading to increased caution among retail traders.
The tightening regulatory environment has further contributed to this atmosphere of caution, with new ownership limits on exchanges discouraging many traders from participating actively. This has led to an even more pronounced drop in trading activity over recent weeks.
The interconnection between the crypto and stock markets in South Korea is evident, as both sectors are heavily influenced by the same group of traders. Many investors switch between technology stocks and cryptocurrencies, meaning a dip in one market can swiftly impact the other. For instance, the KOSDAQ index, which focuses on small-cap tech stocks, has plummeted 31% within the last nine weeks, effectively erasing nearly a year’s worth of gains. This correction draws parallels to the 2020 market crash when the index fell 32% in just five weeks.
Furthermore, the KOSPI has also taken a hit, declining 20% in three weeks and entering what is technically regarded as a bear market. As investors' optimism around artificial intelligence wanes, particularly amidst uncertainties surrounding chip and semiconductor investments, many are left reassessing their positions in both the stock and crypto markets.
This material is for informational purposes only and should not be considered as financial advice.
