The Financial Services Commission (FSC) of South Korea is a committee directly under the Prime Minister, and the Financial Supervisory Service, which we are familiar with, is also an organization under its jurisdiction. Recently, the FSC announced the results of its virtual asset business survey for the first half of the year, which can be regarded as the most comprehensive survey of the South Korean market to date.
South Korean Market’s Total Market Value Growth Lags Behind Global Data, Possibly Due to Enthusiasm for Altcoins
As of the end of June 2024, a total of 37 companies participated in the report, of which 16 were not included (11 companies have closed, and 5 did not submit). Among the 21 virtual asset business operators, there are 14 exchanges and 7 wallet providers. We observe that the market capitalization of cryptocurrencies in South Korea surged from 43.6 trillion KRW in the second half of 2023 to 55.3 trillion KRW in the first half of 2024, an increase of 11.7 trillion KRW, or approximately 27%. In comparison, the total market capitalization of cryptocurrencies globally rose from 1.73 trillion USD in the second half of 2023 to 2.41 trillion USD in the first half of 2024, an increase of 680 billion USD, approximately 39%. This indicates that the overall performance of the South Korean market during this period has slightly lagged behind global developments, potentially reflecting a tendency towards small-cap competing coins rather than the stronger mainstream coins observed in recent months. Furthermore, the number of listed digital assets in the South Korean market decreased from 1333 to 1207, a reduction of approximately 9.5%. Even after excluding coins listed on multiple exchanges, this figure still stands at 7.7%. This data corroborates our previous reports, highlighting the high turnover rate in the South Korean market. 54% of coins do not last two years, with half of them failing to survive even one year.
(Financial Supervisory Service of Korea: 20% of coins in the South Korean market do not last a year, data reveals liquidity behind kimchi premium)
15% of South Koreans Have Exchange Accounts, Most Have Not Seriously Invested in Cryptocurrencies
The daily trading volume in the South Korean market also increased from 3.6 trillion KRW in the second half of last year to 6 trillion KRW, a rise of approximately 67%. Along with the dramatic increase in trading volume, the total profit and loss amount doubled, rising from 287 billion KRW to 590 billion KRW. The number of users increased from 6.45 million to 7.78 million, a growth of 21%. Based on a total population of 50 million in South Korea, about 15% of the population has registered with exchanges. However, as we mentioned earlier, the top 1% of users in the South Korean market accounts for 70% of the overall market. We can see that the number of users holding less than 1 million KRW increased from 4.55 million to 5.67 million, with the proportion rising slightly from 70% to 72%.
(The top 1% of accounts in South Korea hold 70% of the total market investment, revealing the mystery behind the kimchi premium)
Additionally, the Financial Services Commission warned that the price volatility of digital assets is at 70%, an increase of 8 percentage points compared to the second half of 2023, which is something to be particularly cautious about. Furthermore, the significant reduction in anti-money laundering personnel and the bankruptcies of exchanges are also matters that investors should pay attention to.