South Korea's cryptocurrency market is a significant focal point for global investors, known for its vibrant trading activity and unique market dynamics. In a notable shift, the domestic exchange landscape has seen a change in leadership. Recently, Bithumb surpassed the long-standing leader Upbit in trading volume, temporarily claiming the top spot as the largest trading platform in the country.
How Bithumb Regained the Trading Volume Crown
According to data from CoinMarketCap, as of early this week, Bithumb's 24-hour trading volume reached 5.04 trillion KRW, exceeding Upbit's 4.41 trillion KRW. This surge allowed Bithumb to capture approximately 50% of the market share, marking a significant milestone.
The competition between Bithumb and Upbit has been intense since 2019. However, after Upbit secured a real-name account partnership with KEB Hana Bank in 2021, it attracted a larger user base and consistently maintained the leading position. Bithumb's recent outperformance represents its first time leading in trading volume in over three years.
Key Factors Behind the Trading Volume Surge
Zero-Fee Trading Policy
A major driver behind Bithumb’s growth was its introduction of a zero-transaction-fee policy last October. Aimed at expanding its market presence, this strategy successfully increased Bithumb’s market share to around 20%. Additionally, the exchange launched a series of promotional campaigns, including membership rewards and random cryptocurrency airdrops, to celebrate its 10th anniversary and attract more traders.
Introduction of KRW/USDT Trading Pair
Another critical factor was Bithumb’s listing of the Korean Won (KRW) and Tether (USDT) trading pair on December 7. This new offering significantly boosted transaction activity. As of late December, USDT trading volume on Bithumb reached approximately 923 billion KRW, becoming the second most-traded asset after Bitcoin and accounting for nearly one-third of the exchange’s total trading volume.
It is worth noting that a large portion of USDT trading was dominated by major holders, with the top 10 holders accounting for about half of all USDT transactions. This indicates substantial involvement from high-volume traders, often referred to as "whales."
Market Context and Investor Behavior
South Korean exchanges have traditionally favored KRW and Bitcoin-based trading pairs. Upbit, for instance, does not currently support any USD-backed stablecoins. For the average Korean investor, holding USDT has not been a common practice since cryptocurrencies can be purchased directly using the local currency.
This has led to discussions about the potential use of stablecoins for purposes other than routine trading. In response to these concerns, a Bithumb representative stated:
Following the zero-fee policy and rising Bitcoin prices, interest in cryptocurrency assets has grown, bringing in new investors. We continuously monitor for any suspicious trading activities.
Frequently Asked Questions
What caused Bithumb’s sudden increase in trading volume?
Bithumb’s trading volume grew due to its zero-fee policy and the introduction of the KRW/USDT trading pair. Promotional events and rising market interest also contributed significantly.
How does Bithumb’s volume compare to Upbit’s now?
As of recent data, Bithumb briefly surpassed Upbit with 5.04 trillion KRW in 24-hour volume compared to Upbit’s 4.41 trillion KRW. However, market positions can fluctuate rapidly.
Why is USDT trading significant in the Korean market?
USDT offers an alternative to KRW-based trading, attracting large traders. Its introduction has diversified trading options and increased liquidity on supporting exchanges.
Are there concerns about illegal activities with USDT?
Some market observers have raised questions, but exchanges like Bithumb have stated they are monitoring transactions closely to prevent illicit activities.
What is the "Kimchi Premium"?
The term refers to the higher prices of cryptocurrencies on Korean exchanges compared to global markets, often due to high demand and limited supply.
Will Upbit list USDT or other stablecoins?
There has been no official announcement from Upbit regarding the listing of USD-backed stablecoins as of now.
The recent shift in trading volume leadership between Bithumb and Upbit highlights the competitive and fast-evolving nature of South Korea’s cryptocurrency ecosystem. Strategic decisions such as fee eliminations and new trading pairs can quickly alter market dynamics. For those interested in exploring real-time trading platforms, understanding these trends is essential. Staying informed with accurate data and analyzing market movements can help navigate this dynamic environment.