Author: 0xFacai, BlockBeats
Recently, with the surge in the value of “antique coins” such as XRP, the news of “South Korean aunts rushing into the crypto market” has spread in the community again. At the same time, the trading volume of XRP, APT and other related tokens on South Korean trading platforms such as Upbit and Bithumb even exceeded that of Binance. In other words, the trading volume of these tokens in the South Korean market alone is enough to match the total trading volume in the rest of the world.
For a long time, the crypto community has regarded listing on Upbit as a great boon for projects. After a token is listed on these Korean exchanges, the price can often soar rapidly in a short period of time. This strong purchasing power has made the world curious about the "Kimchi Premium". How does the Korean cryptocurrency market work? What is the hype logic of investors here?
Andy conducted an interview with members of Frax Finance, who have been engaged in cryptocurrency development and education in South Korea for many years, delving into the investment logic and real situation of the South Korean cryptocurrency market.
South Korea's 'another stock market'
BlockBeats: You have a very strong development in the South Korean market, such as a large amount of buying, etc. How do people enter the cryptocurrency market and how do they choose their coins?
Andy: Frankly, this is still a puzzle that everyone is trying to solve. One thing I'm sure of is that DeFi is relatively weak here because entering and exiting funds from the trading platform is very convenient. I am a Canadian citizen and have lived in South Korea for 10 years. In the early years, I could trade on Upbit and Bithumb. I remember it only took five minutes to open a bank account and connect it to Upbit or Bithumb, easily trading and withdrawing in Korean won.
So in South Korea, it's very easy for everyone to enter the cryptocurrency market and invest; it's not difficult, although people must open accounts at specific banks. Secondly, I think the act of trading cryptocurrencies carries a sense of 'hope' among South Korean investors, especially among the younger group aged 20 to 30.
Moreover, the media in South Korea are discussing this topic. You can see that people from their twenties to sixties and even seventies are participating in the cryptocurrency market. I don't know if you've heard, but the Bithumb office building was once crowded with people aged 50 to 70 trying to open accounts, especially when the new round of the bull market started.
BlockBeats: Is this situation happening in the previous bull market or this one?
Andy: This is during this bull market, just in the last week or two, and it has been reported in the news.
Retirees aged 50 to 70 are queuing up to open accounts, and the queue has even exceeded 3,000; it's really crazy. The mainstream media and social networks are also talking about the cryptocurrency secondary market, although the mainstream media often tends to portray its dangers. However, with Bitcoin hitting a historic high, more and more people are starting to pay attention.
According to media reports, a nearly 60-year-old housewife said while waiting to open an account, 'It feels wasteful to keep retirement funds in a bank account, so I tried investing in Bitcoin and Dogecoin'; the image source is from the internet.
Regarding young people, I think many people in their early twenties see this as a chance similar to buying a lottery ticket. I don't want to call it gambling, but they indeed see cryptocurrencies as a way to make quick money because the media coverage they are exposed to is more about some people making a lot of money through cryptocurrencies, which is more attractive than news about losses. Many people in their thirties will be slightly more strategic, trying to understand what the projects behind the tokens are, but even so, many friends around me still buy tokens first and then ask in the community what this project is, so actually, most people do not understand the real situation of the projects.
This mentality may stem from a strong FOMO (Fear of Missing Out), which is also very common in Korean culture. The culture of following trends in Korea is very extreme. Whether in entertainment or investment, many people feel that if they do not participate, they will fall behind the trend and even feel disconnected from the entire culture. So if you don't know what you're investing in, it may be due to the fear of missing out on opportunities, or friends suggesting you join in.
Having lived in Canada, where everything is relatively more leisurely, I never felt the pressure to chase. But after coming to South Korea, I felt the fast-paced lifestyle in society. For example, you have to graduate at a certain age, serve in the military, get married, find a job, and also invest. So when people around you are trading cryptocurrencies on Upbit or Bithumb, you feel like you can't fall behind. I think many people are driven by FOMO, afraid of falling behind others in investment, especially when they see friends starting to make money; this feeling becomes even stronger.
BlockBeats: Has the DYOR (Do Your Own Research) culture developed in the South Korean cryptocurrency market over the past few years?
Andy: I have been working in the cryptocurrency field for seven years and have lived in South Korea, and indeed I have seen more and more educational and research platforms emerging. Many offline activities and Web2 projects are also getting involved, genuinely helping people understand and learn about cryptocurrencies. Increasingly, investors indeed conduct their own research before purchasing tokens, and many KOLs are discussing different fields of cryptocurrency, including NFTs and other projects, and teaching people how to transfer funds from centralized trading platforms for airdrops or staking.
However, the huge trading volume of South Korean trading platforms can often rival Binance, mainly because most of the funds remain on the trading platform. For example, when I tell someone that there is a pool with an annualized return of 100% as long as they move tokens from the platform to MetaMask and stake on another public chain, many people will give up trying due to the complicated process. I think this is an area where we need to significantly improve education. Compared to the U.S. and other places, South Korea is still far behind in DeFi and wallet usage.
Here, most traders are just trading on the platform, and the funds do not leave the centralized trading platform to individual wallets. Of course, younger groups, such as those in their 20s to 30s, do indeed do some research themselves and are willing to try these projects, but compared to the overall number of market participants, this group is still relatively small.
BlockBeats: So in South Korea, can we view the cryptocurrency market as being as large as the stock market, or at least comparable?
Andy: I think this comparison is reasonable. I believe that at least in terms of media attention, cryptocurrencies indeed occupy a significant portion. The frequency with which people talk about cryptocurrencies is about the same as the stock market. But the difference is that cryptocurrencies are not seen as the best choice; compared to the stock market, their image is not so glamorous.
If the stock market falls, media coverage might say 'government policy is ineffective' or 'South Korea's financial and economic situation is poor.' But if Bitcoin suddenly drops by 40%, the media usually says, 'Look, this situation has happened again, and this is why cryptocurrencies are so dangerous; they have ruined many people's lives,' so the public sentiment around the two is different.
But in reality, we know that as long as you do enough research, cryptocurrencies are relatively safe. Although their volatility is greater than that of the stock market, if you know what you are doing, it is not as dangerous as imagined. If I know nothing about a token and just buy a meme coin following the trend, and then it suddenly drops 80%, then obviously I would feel it's a scam. But if I know in advance what I am investing in, and I didn’t do enough homework, then losses are also to be expected; that's the difference.
BlockBeats: In your opinion, how much impact do negative media reports have on South Korean cryptocurrency investors?
Andy: This is an interesting thing. Many media outlets have been publicizing the dangers of cryptocurrencies and advising people not to participate, but in fact, this may have attracted even more people to try it. Because many people just follow the trend, not because they truly understand cryptocurrencies.
South Korea is a country that pays great attention to trends, whether in music, fashion, or other fields; everyone always chases the latest trends. The same goes for cryptocurrencies: 'Everyone is investing in cryptocurrency trading, so I have to participate,' or 'Everyone is discussing Bitcoin, so I have to join in.' When I get into a taxi and the driver starts asking, 'Have you heard of Bitcoin?' this is usually a signal for me to sell some tokens.
However, during bear markets, the general public no longer discusses Bitcoin, but the market's trading volume remains large. If you observe those who are truly focused on the cryptocurrency market and do their own research, they are actually very smart, keeping up with market trends, and sometimes their information is even faster than mine, especially regarding news about new projects. In South Korea, there are some 'crypto enthusiasts' who are very smart and are well aware of all the latest developments in the cryptocurrency market.
What is the logic behind retail investors' cryptocurrency speculation in South Korea, and why are APT and XRP the most popular?
BlockBeats: Are meme coins a popular track in the South Korean market?
Andy: Based on my personal experience, they do not often trade meme coins. It's not hard to understand; think about it, these coins are basically not on the listing of centralized trading platforms, and people usually trade tokens that are already available on the platform using Korean won. Moodeng was recently listed on Bithumb, and I think this might bring some changes.
However, Dogecoin is still quite popular in South Korea, but I bet many people may not know that Dogecoin actually has no supply limit. Recently, people just think of Dogecoin as equal to Musk, and Musk has a good relationship with Trump now, who is about to become president, so there is a lot of optimism around Dogecoin.
But overall, once the price of a token starts to soar in South Korea, it leads to a massive influx of funds, pushing the price further up, because people will sell other assets to invest in Dogecoin or other tokens that are rapidly rising. This is another manifestation of the FOMO effect. I even think that many people trade Solana in South Korea, but they don't use SOL to buy meme coins in the on-chain ecosystem.
BlockBeats: Since it's not to participate in the ecosystem, why buy Solana? What other popular targets are there in South Korea?
Andy: I think this is mainly because Solana is a globally popular token; you will see many globally popular tokens like Solana that South Koreans love to buy. But you will also see some tokens that are not very popular in other regions or have not been heard of, yet still have a large trading volume in South Korea, such as Aptos, whose token APT has the highest trading volume in the world.
In the South Korean cryptocurrency market, there are some unique phenomena, such as many people purchasing tokens like SEI and SUI simply because they sound like girls' names, and there’s a viral internet culture saying 'buy SEI and SUI will help you find a beautiful girlfriend.' Similar situations can be seen with APT, which means 'apartment,' so people say, 'buying APT will allow you to buy an apartment, and buying ONDO will let you buy a set of apartment-style housing.' Such internet memes actually have a significant impact on the market, so we can see some tokens that are not well-known outside of South Korea have huge trading volumes here, simply because many people do not understand them but still follow the trend; this is actually quite crazy.
BlockBeats: Is Roise's recently popular song (APT) also one of the influencing factors?
Andy: Aptos was already very popular before this. In fact, this is a case I am studying to see what the Aptos team did right, and how projects like IQ or Frax could enter the South Korean market and successfully carve out a niche similar to Ondo or Aptos. I think this is also why the founders of Aptos frequently come to South Korea; I see him often, and I'm no longer surprised. The way the South Korean market operates is indeed a bit strange.
But it can be said for sure that, first, many trades occur on centralized trading platforms; second, people have not done much in-depth research. I think it can be summarized this way: meme coin traders in other parts of the world trade meme coins, while in South Korea, people do not trade meme coins but use the trading methods of meme coins to trade other cryptocurrencies.
BlockBeats: The price of XRP surged recently, and its trading volume on Upbit even surpassed Binance at one point. Why is XRP so popular in South Korea?
Andy: XRP has actually been popular in South Korea for five, six, or seven years. I remember the first cryptocurrency I bought was XRP; at that time, I had no idea what I was buying. I wasn't even in the industry; I was just a college student. It was because my relative told me, 'Buy this coin called XRP; it will rise to $10,’ so I bought some. Then the SEC lawsuit happened, but even so, its popularity in South Korea did not diminish.
This is somewhat like EOS, which may not be talked about much nowadays, but there is still an active EOS community in South Korea, and occasionally the price can surge due to South Korean influence. As for why EOS was so popular, I can't really say.
The reason Ripple is so popular, I think, is that people believe it is the 'next big thing.' Especially when it fights against the government and wins, this narrative becomes particularly strong, especially in the U.S. I don't have a definite answer, but I can say for sure that Ripple is indeed very hot in South Korea. Especially after the news of their victory over the SEC came out, its popularity surged again.
So I think that for a token to become popular in South Korea, it must first achieve some recognition globally before entering the South Korean market. But this is not the case for every token; Aptos seems to have risen in South Korea first.
However, I also know that most traders, including myself, do not deeply participate in the XRP ecosystem. I don't know much about their technology and specific progress. Moreover, many people have learned that they are going to launch their own stablecoin, and I think this could also be a factor driving the market. In South Korea, due to the impact of the Terra/Luna incident, the image of stablecoins is not particularly good.
BlockBeats: The Luna incident had a big impact on South Korea, right? Many institutions invested a lot of money.
Andy: Yes, the situation is very bad. I remember there were many news reports at that time saying that someone committed suicide because of this; it was really tragic. I also know that some large venture capital firms in South Korea invested a lot of money, resulting in huge losses, and many institutions were severely impacted. Therefore, apart from stablecoins like USDT and USDC, the narrative around stablecoins in South Korea is still not very good.
BlockBeats: Another interesting phenomenon is the high premium issue on South Korean trading platforms. Are South Korean investors aware of this or what is their attitude towards it?
Andy: Yes, they definitely know about the 'kimchi premium.' A few years ago, someone bought on one platform with a credit card and then sold on another platform, easily earning a 10% profit. But now this system has been banned, but they definitely know about this phenomenon.
For example, when martial law was declared recently, Bitcoin plummeted by 40% on Upbit and Bithumb within 10 minutes. I'm sure many people tried to buy at a low price and then sell on Binance or wait for it to rebound, but according to my conversations with some people, this arbitrage strategy was very difficult to execute at that time because both Upbit and Bitdump were frozen, and deposits and withdrawals could not be conducted.
I even heard that due to the current unstable situation of the South Korean government, some people will place orders in advance so that when the market experiences extreme declines again, it can automatically execute and receive chips at ultra-low prices.
On December 3, due to the imposition of martial law, BTC experienced a severe negative premium of 40% on South Korean trading platforms like Upbit and Bithumb; the image source is from the internet.
BlockBeats: The cryptocurrency tax policy in South Korea seems to have been postponed continuously. Is everyone paying attention to this?
Andy: They are very concerned about this. Whenever it comes to a critical moment, the politicians running for office will include postponing taxes or conducting in-depth research on relevant policies as part of their campaign platform. South Korea has already experienced three tax postponements, each time by two years, and now it's another two years. However, as far as I know, the new president is not very optimistic about cryptocurrencies, which worries some people. Nevertheless, the issue of cryptocurrency taxation is a topic of great concern, and everyone is paying close attention to it.
