Are Koreans no longer interested in Bitcoin? Trading volume on two major exchanges dropped by nearly 70%

The trading volumes of UPbit and Bithumb, South Korea’s two largest crypto exchanges by daily trading volume, have fallen by 70% and 63%, respectively, since 2018.

According to an electronic announcement from South Korea’s Financial Supervisory Service (FSS), UPbit’s parent company Dunamu’s annual profit fell 93% year-on-year to $7.4 million.

The sharp drop in revenue for both companies is mainly due to the significant drop in demand for cryptocurrencies in the local crypto market over the past 24 months.

South Korea’s cryptocurrency trading volume drops sharply

At its peak in 2017 and 2018, Bithumb processed transactions of approximately 1.2 million BTC per month, equivalent to $7.2 billion.

However, at the height of price volatility in 2019 and 2020, Bithumb processed transactions of around 300,000 BTC. This suggests that its monthly Bitcoin trading volume fell by 75% from 2017 to 2018.

Likewise, UPbit’s monthly Bitcoin trading volume has also dropped from 1.35 million Bitcoins in 2017 to around 250,000 Bitcoins in 2020. In the past two years, UPbit’s average monthly trading volume has been 200,000 Bitcoins.

Since late 2017, the price of Bitcoin has struggled toward its all-time high of $20,000, while trading volumes on all major cryptocurrency exchanges in the country, including Korbit, Coinone and Gopax, have fallen by 60-80%.

(Average monthly Bitcoin trading volume on UPbit since the end of 2017)

The sharp drop in revenues at South Korea’s top crypto exchanges comes after the local market was mired in two years of stagnant growth, with UPbit and Bithumb also facing high-profile legal cases.

In December 2019, South Korea’s National Tax Service charged Bithumb $67 million in taxes for providing services to overseas users. UPbit has been accused of faking trading volumes, but the company has strongly denied this.

Both exchanges have also faced hacker attacks, with UPbit suffering a $50 million hack four months ago.

Can South Korea’s legislation save the cryptocurrency market?

The Special Financial Information Law passed by the South Korean National Assembly is believed to legalize the local crypto trading market.

It remains uncertain whether the bill will be enough to revive interest in cryptocurrencies in South Korea in the short to medium term. Until the legislation is passed, local investors will face little hindrance in trading cryptocurrencies as the country’s top exchanges secure contracts with mainstream financial institutions.