South Koreans prefer altcoins and home-grown tokens; major cryptocurrencies like bitcoin and ether have low volumes in the country.
Traders are attracted to the high-profit potential associated with altcoins and accept the high risks.
South Koreans are active crypto traders, with local exchanges outperforming their global rivals in volume, and have a strong preference toward altcoins and local tokens, according to a report from DeSpread Research.
The number of crypto investors in the country hit about 6 million, or 10% of the population, this year, according to a Korea Financial Intelligence Unit (KoFIU) survey, the report said. “The majority of these investors are primarily engaged in investment activities centered around centralized exchanges, making the influence of centralized exchanges in the Korean crypto market significant.”
Since March, centralized exchanges worldwide have seen declines in trading volume as bitcoin traded sideways. Local exchanges, such as Upbit – the country’s largest, bucked the trend, with trading volume growth outpacing market leader Binance by July.
“Korean exchanges had an explosive reaction to news related to Ripple. The trading volume of the four major Korean exchanges, which recorded $27 billion in June, increased to $37 billion in July, a 37% increase from the previous month,” DeSpread wrote.
Korean traders, after all, are big into altcoins and not so fond of the major tokens, the report said.
“The majority of individual investors on Upbit show strong interest in altcoins with high-profit potential and tend to accept the associated high risks. This is considered one of the reasons for the high proportion of altcoin trading in the Korean market,” DeSpread wrote.
“Cryptocurrencies that dominate the global market, such as Bitcoin (BTC), Ethereum (ETH), and Polygon (MATIC), boast large trading volumes worldwide. However, within Upbit, their trading volume shows surprisingly low levels,” the report reads. “This phenomenon indicates that Upbit has unique characteristics compared to the global market and reflects regional disparities in investor preferences and investment strategies.”
The preferred networks for transactions are different in South Korea as well, with Tron’s network being used for the lion’s share of transactions because of the relatively lower transaction fees.
While South Korean exchanges have registered a significant recovery in volume, the country’s traders still use overseas platforms to store their assets. A September report from the country’s national tax service shows that South Koreans hold $99 billion in digital assets overseas.