Korean Crypto Market Insights: 10% of Population Invests, Upbit Dominates 80% Share

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The South Korean cryptocurrency market stands out as one of the most active and distinctive in the global digital asset landscape. As of mid-2023, approximately 6 million South Koreans—over 10% of the population—were actively investing in crypto assets. This high adoption rate reflects a mature, retail-driven market with unique behavioral patterns, exchange dominance, and regional preferences that diverge significantly from global trends.

This analysis dives deep into the dynamics of South Korea’s centralized exchanges (CEX), focusing on trading volume trends, investor behavior, platform competition, and network preferences—offering a comprehensive view of one of Asia’s most influential crypto markets.

Centralized Exchanges at the Core of Korean Crypto Activity

Most Korean crypto investors engage primarily through centralized exchanges, making platforms like Upbit, Bithumb, Coinone, and Korbit central to market activity. According to data from the Korea Financial Intelligence Unit (KoFIU), these four exchanges collectively shape the investment habits and trading behaviors of millions.

While global crypto markets experienced reduced volatility and declining trading volumes after Q1 2023—with Bitcoin hovering between $27,000 and $28,000—the relative influence of Korean exchanges has grown. Despite an overall dip from a February peak of $45 billion in monthly volume, Korean CEXs rebounded strongly by July, reaching $37 billion—outpacing growth seen on some international platforms.

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Notably, the combined trading volume of South Korea’s top four exchanges now represents about 16% of Binance’s volume, up from just 7% in March 2023. This steady increase underscores the rising importance of domestic platforms amid evolving regulatory clarity and strong retail participation.

Upbit’s Market Dominance: An 80% Powerhouse

Upbit, operated by Dunamu Inc., is the undisputed leader in South Korea’s crypto ecosystem. In February 2023, it recorded a staggering $36 billion in monthly trading volume, capturing roughly 80% of the domestic market share. Even during a brief dip to 70% in August, its dominance quickly rebounded to 80%, indicating structural loyalty among users.

In contrast:

This extreme concentration highlights a highly consolidated market where user trust, brand recognition, and exclusive listings play pivotal roles.

One key factor behind Upbit’s strength is its role as the primary marketplace for so-called "kimchi coins"—tokens that are either listed exclusively or traded predominantly on Korean exchanges. These include niche assets like Steem Dollars ($SBD), Moss Coin ($MOC), and Hippocrat ($HPO), which see nearly 100% of their trading activity on Upbit.

The Ripple Effect: How News Moves Korean Markets

Korean exchanges are highly sensitive to regulatory news and macro events. A prime example occurred in July 2023, when Ripple scored a partial legal victory against the U.S. SEC. The ruling triggered a wave of buying across local platforms:

This reaction was far more pronounced than on Binance or Coinbase, illustrating how Korean retail investors react swiftly and emotionally to regulatory developments, especially those involving major altcoins.

Bithumb’s Zero-Fee Experiment: Short-Term Gain, Long-Term Questions

In October 2023, Bithumb launched a 0% trading fee policy in an aggressive move to gain market share. Initially successful:

However, the effect faded within weeks. Volume normalized, and Bithumb returned to its prior standing.

Why did it fail to sustain momentum?

  1. Fees aren’t the primary decision driver – Korean investors prioritize platform stability, security, and unique token listings over marginal cost savings.
  2. Revenue sustainability concerns – Eliminating fees undermines core exchange revenue, raising doubts about long-term viability.
  3. No differentiation beyond pricing – Without added features or improved UX, the incentive to switch was minimal.

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This experiment suggests that user retention in Korea relies more on ecosystem depth than price competition.

Investor Behavior: High Risk, High Reward

Korean crypto investors exhibit distinct risk appetites compared to their Western counterparts.

On Upbit, small-cap altcoins dominate trading activity. While BTC and ETH account for large portions of volume on U.S.-based Coinbase, they represent a relatively small fraction on Upbit. Instead, investors flock to volatile, low-cap tokens with explosive potential.

Key findings from recent trading data:

$LOOM’s price rose nearly 10x in one month before crashing—driven largely by speculative trading rather than fundamental developments.

This behavior reflects a market where short-term speculation outweighs long-term hodling, especially during periods of low BTC volatility.

The "Gaduri" Effect: How Withdrawal Suspensions Boost Prices

A uniquely Korean phenomenon known as "gaduri" (literally “fish farm”) occurs when exchanges temporarily suspend deposits or withdrawals for certain tokens.

Take $FLOW in mid-October:

With no way to move tokens offshore, buying pressure builds domestically—creating artificial scarcity and fueling rallies disconnected from global prices.

This illustrates how platform-level policies directly influence market dynamics in closed-loop ecosystems like South Korea’s.

Why Tron Dominates Deposit & Withdrawal Activity

When moving funds, Upbit users overwhelmingly prefer the Tron network over Ethereum:

According to CoinMetrics, Tron processes over 2 million USDT transactions daily, compared to ~100,000 on Ethereum—highlighting its dominance in low-cost remittances.

For Korean investors, this isn’t about DeFi or staking—it’s about efficient cross-exchange fund movement. Many use Tron to transfer stablecoins quickly between Upbit and offshore platforms offering futures or margin trading not available domestically.

Regional Markets Demand Localized Strategies

The Korean market proves that global crypto projects cannot adopt a one-size-fits-all approach. Success requires understanding:

Projects aiming to gain traction in Korea must consider listing on Upbit or Bithumb early, engaging local communities, and tailoring messaging to short-term gain narratives.

Frequently Asked Questions (FAQ)

Why do Koreans invest so heavily in crypto?

High internet penetration, tech-savvy youth, limited alternative investment options, and strong community-driven trading culture contribute to widespread adoption.

What are "kimchi coins"?

Kimchi coins refer to cryptocurrencies listed primarily or exclusively on South Korean exchanges, often with limited global presence but high local trading volume.

Is arbitrage still possible between Korean and global markets?

Limited due to capital controls and withdrawal restrictions. The "kimchi premium" has narrowed but still exists during volatility spikes.

Why is Upbit so dominant?

Strong brand trust, exclusive listings, seamless KRW integration, and early mover advantage have solidified Upbit’s position as the go-to platform.

Are Korean investors different from U.S. or European ones?

Yes—Korean investors are more retail-focused, speculative, and responsive to short-term news compared to the institution-heavy U.S. market.

Can other exchanges challenge Upbit?

Unlikely in the short term. Network effects, user inertia, and listing exclusivity create high barriers to entry.

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The South Korean crypto market remains a fascinating case study in regional divergence. With over 10% of its population actively investing and a tightly concentrated exchange landscape led by Upbit, Korea continues to shape unique trends that defy global norms—from kimchi coins to the gaduri effect. For traders, builders, and analysts alike, understanding this market is essential for navigating the future of digital assets.