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Analysis of the Prosperity of the Korean crypto market: The Digital New Frontier under the Kimchi Premium
South Korea Crypto Assets Market Report: The New Digital Frontier Under Kimchi Premium
1. Introduction
As the global Crypto Assets market stabilizes, South Korea continues to showcase a unique prosperity characterized by active trading and heightened enthusiasm. By the end of 2024, the total market capitalization of the South Korean Crypto Assets market exceeded $74.8 billion, with the five major local exchanges managing a combined $73 billion in assets. The daily trading volume in December surged from $2.38 billion in October to $10.7 billion, surpassing the two major South Korean stock exchanges within just two months.
The South Korean crypto market is expected to grow from $264.3 million in 2024 to $635.4 million in 2030, with a compound annual growth rate of 16.1%. As of April 2025, approximately 25 million people have opened accounts on virtual asset exchanges, equivalent to half of South Korea's total population having invested in the crypto market.
More notably, there is the unique "Kimchi Premium" phenomenon in South Korea. In March 2024, this premium reached 8.5%, and in November, it once escalated to 10%, far exceeding the global average, reflecting the high enthusiasm of local investors and the arbitrage demand under capital controls.
The massive flow of funds, extensive user base, and unique market price differential effects together shape the high activity and extraordinary popularity of the Korean Crypto Assets market, resembling a "golden land" of the digital age in the global crypto landscape.
2. Analysis of the Reasons for the Hot Korean Crypto Market
2.1 Economic Reasons
Investment channels are restricted
Traditional investment channels in South Korea are relatively limited. When real estate and stocks face high prices, declining returns, poor liquidity, and high entry barriers, investors naturally tend to seek alternative assets with higher marginal utility.
In South Korea, traditional investment channels are facing structural difficulties:
Real Estate: South Korea's economic growth rate in 2023 is only 1.4%, and although it is expected to rebound to 2% in 2024, consumer and investment confidence remains weak. Since 2010, housing prices in the capital area have increased by 47.1%, with the five major metropolitan cities seeing a rise of 76.5%. In 2024, the transaction volume in the capital area is expected to decrease by 7.5% year-on-year, with Seoul experiencing a decline for three consecutive months from August to October.
Stock Market: The KOSPI fell by 8.03% in 2024, far below the Shanghai Composite Index's +12.68% and the Nikkei 225's +17.06% during the same period. The return gap compared to the S&P 500 Index reached 32.3%, the highest since 2000.
Against the backdrop of continued poor performance in traditional investments, some Korean investors are beginning to turn their attention to the more volatile and higher potential return realm of Crypto Assets.
Low interest rates and loose monetary environment
The long-term accommodative monetary policy and low interest rate environment have prompted South Korean investors to accelerate their shift towards high-yield assets. Since the pandemic, the Bank of Korea's benchmark interest rate has been maintained at 3.5% for an extended period, significantly lower than the Federal Reserve's rate of over 5%, leading to a decline in the attractiveness of savings and making real returns difficult to withstand inflationary pressures.
Against this backdrop, the demand for high-volatility, high-return assets has increased. Crypto Assets have become the preferred allocation direction for risk-tolerant investors, especially among the younger population, due to their strong return potential, low entry barriers, and high liquidity.
Expectation of Korean Won Depreciation
In recent years, the Korean won has continued to depreciate, with the exchange rate against the US dollar briefly falling to 1473.75 won in April 2025, the lowest level since 2009. The depreciation of the won, combined with high oil prices and rising supply chain costs, has increased domestic inflationary pressure. In March 2025, South Korea's CPI rose 2.1% year-on-year, harming residents' actual purchasing power and putting pressure on economic recovery.
Crypto Assets, priced in US dollars, globally circulated, and decentralized, have become a new path for investors to hedge against domestic currency depreciation and pursue asset preservation.
2.2 Social Psychological Reasons
According to the theory proposed by economist Samuelson, "Happiness = Utility / Desire", when desire rises rapidly while the acquisition of utility is limited, individual happiness will significantly decline.
At the same time, the consumption concepts of the young population in South Korea are undergoing profound changes, further influencing their investment preferences:
Despite differing consumption attitudes, both converge on the investment motivation for high-yield assets, and Crypto Assets perfectly meet their common psychology of pursuing returns and wealth growth.
2.3 Why is South Korea so prosperous, and not Japan?
2.3.1 Economic Perspective: The Korean Won is relatively weak, requiring alternative paths.
Therefore, compared to Japanese investors, South Korean investors lack long-term trust and security in domestic currency assets, tending to seek non-local currency-denominated assets that can circulate globally, and crypto assets are highly aligned with investor needs.
2.3.2 Economic Perspective: Traditional investment returns are lower, seeking higher returns.
2.3.3 Policy Perspective: South Korea has an open attitude, while Japan is conservative and restrictive.
South Korea has a relatively open attitude towards Crypto Assets, while Japan adopts a more conservative and restrictive policy.
2.3.4 Cultural Perspective: South Korea pursues quick wealth, while Japan focuses on steady accumulation.
2.4 Insights from the Korean Model for the Global Crypto Market
As the landscape of the Asian crypto market changes, the "middle way" demonstrated by South Korea is highlighting its strategic value. Compared to Singapore's recent tightening of regulations on local projects providing services overseas, as well as the slow pace of approvals and taxation in Hong Kong and Japan, South Korea's institutional flexibility, cultural fit, and capital environment are creating new comparative advantages.
For the global market, the key insight from the Korean model is that regulation can be encouraging guidance rather than comprehensive relaxation; user education and cultural adaptation are the underlying logic of all growth; infrastructure sovereignty and international collaboration are not in conflict, but rather a dual driving force for future development.
In the new policy game in Asia, South Korea has not only become an active consumer market but also has the potential to become a regional hub for technology and asset management. If the global Crypto Assets industry wants to localize and take root in the future, South Korea provides a practical model worth referencing.
3. Analysis of Korean Market Users
3.1 User Profile of the Korean Market
Market and Account Types: Overall Rapid Growth
Age and Gender: Significant growth in young users, increase in female participation
Age and Capital Scale: Intergenerational Stratification is Obvious
3.2 User Habits Phenomenon
3.2.1 User Asset Preferences
3.2.2 Overall User Behavior Characteristics
In the South Korean Crypto Assets market, user behavior shows a highly centralized characteristic:
3.2.3 On-chain Usage
The Korean market's dependence on centralized exchanges (CEX) is still significantly higher than the global average. Approximately 68.9% of the trading volume is still concentrated on centralized platforms, while the usage rates of decentralized exchanges (DEX) and DeFi protocols are relatively low.
However, South Korea's on-chain ecosystem is rapidly awakening. The proportion of DEX trading rose from 8.57% to nearly 17% in 2024, and by early 2025, DEX trading accounted for 16.7%.
4. Overview of the South Korean Crypto Market Exchanges
The South Korean Crypto Assets trading market shows a highly concentrated pattern, mainly dominated by five major spot exchanges: UPbit, Bithumb, Coinone, Korbit, and Gopax.
4.1 UPbit
Operated by Dunamu and supported by Kakao. It is one of the first platforms in South Korea to obtain a Virtual Asset Service Provider (VASP) license. Since its establishment in 2017, it has rapidly developed into a leader in the South Korean market, supporting