One in five young Koreans is buying Bitcoin. “Middle-aged people are speculating in real estate, but we are not allowed to speculate in cryptocurrencies?”

If I hadn’t taken the risk, I might never have been able to buy a house.

As Bitcoin plummets, perhaps the most painful people are young people in South Korea.

Since hitting an all-time high of $68,928.9 per coin in November 2021, Bitcoin has entered a volatile downward channel, and has fallen by more than 70% so far. In particular, the recent interest rate hike by the Federal Reserve has increased investors' concerns about an economic recession, and the price declines of many cryptocurrencies in the market have intensified.

On June 18, Bitcoin fell below $18,000 per coin (approximately RMB 120,000).

One out of every five young Koreans is trading in cryptocurrency.

According to statistics from the Financial Services Commission (FSC) of South Korea, there are 3.08 million cryptocurrency holders aged 20-39, accounting for 23% of the population in this age group in South Korea (13.431 million).

Behind South Korea's prosperity, one in five young people want to make a fortune through cryptocurrency

Kim Ye-won, who is in her 20s, returned from studying abroad and works for a large company, but her salary is not enough to afford a small apartment in Seoul. She has invested more than 50 million won (about 260,000 yuan) in the Bitcoin market, checking the market on her phone every day, and regards this as "the only way to get ahead."

Now it seems that this dream is a bit far away.

"The recent blow is too much for me to bear, but I have no choice," said Jin Yiyuan.

At 12:00 noon on June 20, Beijing time, the price of Bitcoin barely climbed to $20,051.7 per coin (about RMB 130,000), but for young Koreans, this increase is not enough. If an investor bought 3 Bitcoins at the high point at the end of last year (that is, $68,928.9 per coin), the loss has now reached 193 million won (about RMB 1 million).

Multimillionaire

Park Woo-jin, 28, lives with his parents. After graduating from college, he worked for a while, but soon quit and concentrated on trading Bitcoin at home.

Park Woo-jin didn't dare tell his parents that he had lost all his money recently, and the loss has reached tens of millions of won. In an interview with Korean media, his eyes were red and his hair was messy: "People call cryptocurrency speculation gambling, which is unfair, but I admit that what they say is more or less true."

Today, South Korea's cryptocurrency market is full of young speculators like this: most of them are between 20 and 40 years old, many of them have received higher education, and they even quit their jobs in large companies just to take a chance and change the trajectory of their lives.

In the eyes of young Koreans, if you try hard, you might get a chance.

In March 2021, 29-year-old Jiang Jitai, Ji Shiying, and Han Zhengzhu resigned from a large financial company. The three were good friends from ordinary families and had student loans when they graduated from college.

The turning point of their lives came after they invested in virtual currency. After working, the three of them borrowed 100 million won together to speculate in Bitcoin. In 2021, when the market was booming, the three of them suddenly became wealthy people with 3-4 billion won (about 15.6 million to 20.8 million yuan).

In particular, on the evening of October 20, 2021, the price of Bitcoin broke through the historical high of US$64,843 set on April 11, 2021, reaching US$66,000, with a daily increase of 5.64%.

At that time, their parents and seniors in the company persuaded them: "Why don't you continue working and use the money to buy a house in Gangnam District, Seoul." All three refused. They even resigned together and continued to invest in virtual currencies. Ji Siying deposited 90% of his 3 billion won assets in Bitcoin and Ethereum. Jiang Jitai invested 60% of his funds in virtual currencies such as Alt, and also invested in NFT and overseas stocks.

None of the three imagined that a year later, Bitcoin would plummet in such a tragic way.

But the initial investment was too much, and they dare not and cannot give up now.

Han Zhengzhu believes that we should take a long-term view and not just focus on short-term investment. He said: "It is not certain whether we can make money through virtual currency in three months. We should look ahead to the next five or even ten years."

FSC statistics show that as of the end of December 2021, the number of users actually participating in transactions on South Korea's virtual asset exchanges reached 5.58 million, among which people aged 30 and 20 accounted for the highest proportion, totaling 3.08 million.

The traditional path to happiness is out of reach

According to statistics from a South Korean party, in the first quarter of 2021, 2.5 million new accounts were added on South Korea’s four major cryptocurrency platforms, of which 33% were around 20 years old, and another 31% were around 30 years old.

A survey of Korean college students showed that 53% of them were positive about investing in cryptocurrencies, 33% cited the high rate of return as the reason for their interest, and even more than 10% of the respondents believed that cryptocurrency was their "last chance" to achieve class transition.

"Learning from you"

Young people in South Korea are becoming increasingly pessimistic about traditional ways of striving.

Economic pressures have led young people to believe that the traditional path to happiness that their parents took - getting married, buying a house and having children - is now largely unavailable. These young people have found that South Korea faces the world's highest housing price increases, and even those who have worked their way to the top of the workplace cannot afford to buy a house with their work income alone.

What's more, in 2021, a report released by the Korea Economic Research Institute pointed out that in 2020, about a quarter of young people in South Korea (aged 15 to 29) felt unemployed, the highest increase in history. In another survey, more than half of young people said that they would not be able to buy a house without their parents' help.

Investing in cryptocurrency has become one of the few options that can change the fate of young people.

A young Korean man said in an interview: "I was indifferent at first, but the experience of my colleagues made me change my mind completely. If I don't take the risk, I may never be able to buy a house."

In the eyes of young Koreans, if you take a chance, you will probably lose, but if you don’t take a chance, you will definitely lose.

Another young person said: "I know there are a lot of premiums and bubbles in the world of virtual currencies. However, as long as I can make money, I really don't care too much about it."

According to the latest data from the FSC, the current value of South Korea's cryptocurrency market has reached 55.2 trillion won (about 290 billion yuan), and the total daily transaction volume is 11.3 trillion won (about 60 billion yuan).

Bitcoin is the most popular cryptocurrency here, but it accounts for less than 10% of virtual currency transactions in South Korea. More than 90% of the other currencies are alternative coins, which are currencies other than Bitcoin - including some virtual currencies of unknown origin.

Across South Korea, there are 623 cryptocurrencies listed on local exchanges.

However, the FSC warned that more than one-third of these cryptocurrencies have fallen by more than 70% from their historical highs. South Korea's financial regulators also reminded that there are a large number of virtual assets with large price fluctuations in these local exchanges, and users should be cautious in investing. These virtual assets are only listed on specific exchanges and have high investment risks.

Previously, due to the sharp drop in the price of South Korea's virtual currency Luna coin and stablecoin "TerraUS" (UST coin) (from a single coin price of up to US$119.5 to less than US$0.0002), more than 200,000 people in South Korea suffered losses, and the global virtual currency market was greatly impacted.

Regulators said they will implement and amend various laws to combat scams, money laundering and other illegal activities.

However, all these measures and warnings are almost ineffective, and more and more young people are still investing in cryptocurrencies through debt and financing. The Bank of Korea said that household debt among young people aged 20 to 39 has increased by more than 17%.

“Young people’s borrowing levels are not high, so bankruptcies among this group will only have a slight impact on the financial system,” said Kim Su-young, an economics professor at Seoul National University. “However, young people who are about to enter the workforce are going bankrupt and are unable to plan for the future, which will be a loss for the entire economy.”

FSC Chairman Eun Sung-soo once harshly criticized the young people who flocked to the cryptocurrency market at a hearing.

Eun Sung-soo believes that cryptocurrencies are "not securities subject to the Capital Markets Act, but virtual assets with no known content." He refused to call people who buy cryptocurrencies "investors," saying, "The government has no obligation to protect them. If they (young people) go astray, we adults must warn them that they are making a mistake."

Eun Sung-su's remarks sparked a fierce rebuttal from young people. A company employee in his 30s launched an online petition demanding Eun Sung-su's resignation.

"You people in your 40s and 50s are speculating in real estate, disrupting our national economy and people's livelihood. What's wrong with us people in our 20s and 30s investing in virtual currency? We can also learn a lot from you adults," the young employee said sarcastically.

This sarcastic message immediately received more than 200,000 likes online.