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?
Rhythm interviewed Andy, a member of Frax Finance who has been engaged in crypto development and education in Korea for many years, to explore the investment logic and real situation of the Korean crypto market.
Related reading: (How did 'zombie coins' suddenly come back to life?) ('Demon coin manufacturers', Upbit is seizing the pricing power in the crypto market)
Koreans' 'Another Stock Market'
BlockBeats: You have a very strong development in the Korean market, such as a large amount of buying and so on. How do people enter the cryptocurrency market, and how do they choose coins?
Andy: Frankly speaking, this is still a puzzle that everyone is trying to solve. One thing I am sure of is that DeFi is quite weak here, because the convenience of deposits and withdrawals on trading platforms is very high. I am a Canadian citizen and have lived in Korea for 10 years. In the early days, I could trade on Upbit and Bithumb, and I remember that at that time, I could open a bank account and connect it to Upbit or Bithumb. It only took five minutes to complete all operations and easily trade and withdraw in Korean won.
So in Korea, people can easily enter the crypto market and invest; it's not difficult, although everyone must open an account at a specific bank. Secondly, I think the act of trading cryptocurrencies carries a sense of 'hope' among Korean investors, especially among the younger demographic of 20s to 30s.
Moreover, the media in Korea are discussing this topic. You can see that people from their 20s to 60s and even 70s are participating in the crypto market. I wonder if you have heard that the front of Bithumb's office used to be crowded with elderly people aged 50 to 70 trying to open accounts, especially when the new bull market started.
BlockBeats: Is this happening in the last bull market or this one?
Andy: This bull market has been happening just in the last week or two, and it's been reported in the news.
Retired seniors aged 50 to 70 are queuing up to open accounts, and some have even reached over 3000 in line; it's really crazy. Both mainstream media and social networks are discussing the secondary market for cryptocurrencies. Although mainstream media tends to depict its dangers, with Bitcoin hitting an all-time 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'; image source from the internet.
Returning to the young people, I think many young people in their early 20s see this as a chance similar to buying a lottery ticket. I don't want to say it's gambling, but they indeed view cryptocurrencies as a quick way to make money because they are exposed to more media reports about some people making a lot of money through cryptocurrencies, which is more attractive than news about losses. Many people in their 30s tend to be a bit more strategic, trying to understand what the projects behind the tokens are, but even so, many of my friends still buy tokens first and then go into the community to ask what the project is, so in fact, most people do not really understand the true situation of the project.
This mindset may stem from a strong FOMO, which is also very common in Korean culture. The following culture 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, even feeling disconnected from the entire culture. So if you do not know what you are investing in, it may be because you are afraid of missing out on opportunities or your friends suggested you participate.
I lived in Canada before, where everything was relatively calm. I never felt the pressure of chasing. But after coming to Korea, I felt the fast-paced lifestyle popular in society, where you have to graduate at a certain age, serve in the military, get married, find a job, and invest. So when the people around you are trading cryptocurrencies using Upbit or Bithumb, you feel like you can't fall behind. I think many people are driven by FOMO, fearing they will fall behind in investments, especially when they see friends starting to make money; this feeling becomes even stronger.
BlockBeats: So has the DYOR culture (Do Your Own Research) developed in the Korean crypto market over the past few years?
Andy: I have worked in the crypto field for seven years and have lived in Korea for a long time. I have indeed seen more and more educational and research platforms emerging. Many offline activities and Web2 projects are also getting involved, truly starting to help people understand and learn about cryptocurrencies. More and more investors are indeed doing their own research before purchasing tokens. Many KOLs are also discussing different areas of cryptocurrency, including NFTs and other projects, and teaching people how to transfer funds from centralized trading platforms for airdrops or staking.
However, the reason why the huge trading volume on Korean trading platforms can often rival Binance is mainly because most of the funds remain on the trading platforms. For example, when I tell others about a pool with a 100% annualized yield, as long as they transfer the tokens from the platform to wallets like MetaMask and stake them on another blockchain, many people give up trying because the process is very complicated. I think this is where we need to make significant improvements in education. Compared to the U.S. and other places, 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 enter personal wallets. Of course, younger groups, such as those in their 20s to 30s, do some research themselves and are willing to try these projects, but compared to the total number of market participants, this group is still relatively small.
BlockBeats: So in Korea, can we view the crypto market as a market as large as the stock market, or at least comparable?
Andy: I think this comparison is reasonable. I believe at least in terms of media attention, cryptocurrencies do occupy a large proportion. The frequency of discussions about cryptocurrencies is comparable to that of 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 as glamorous.
If the stock market falls, media reports might say 'government policy is ineffective' or 'Korea's financial and economic situation is poor.' But if Bitcoin suddenly drops 40%, the media usually says, 'Look, this situation happened again, and this is why cryptocurrencies are so dangerous; they ruin 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, they are not as dangerous as people imagine. If I know nothing about a token and just follow the trend to buy a meme coin, and then it suddenly drops 80%, I will obviously feel it is a scam. But if I knew in advance what I was investing in and did not do my homework, then losses would be expected; that is the difference.
BlockBeats: In your opinion, how much impact do negative media reports have on Korean crypto investors?
Andy: This is an interesting thing. Many media have been publicizing the dangers of cryptocurrencies, advising people not to participate, but in fact, this may attract more people to try. Because many people just follow the trend, not because they really understand cryptocurrencies.
Korea is a country that pays great attention to trends, whether in music, fashion, or other fields; everyone always chases the latest trends, and the same goes for cryptocurrency. 'Everyone is investing in cryptocurrency trading, so I have to participate' or 'Everyone is discussing Bitcoin, so I have to join.' When I get in a taxi and the driver starts asking, 'Have you heard of Bitcoin?' that is usually my signal to sell some tokens.
However, during the bear market, the general public no longer discusses Bitcoin, but the trading volume in the market remains large. If you observe those who are truly focused on the crypto 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 Korea, there are some 'crypto enthusiasts' who are very smart and are well-informed about all the latest developments in the crypto market.
The logic of retail investors in Korea: why are APT and XRP the hottest?
BlockBeats: Are meme coins a hot track in the Korean market?
Andy: Based on my personal experience, they do not often trade meme coins. This is not hard to understand; if you think about it, these coins are basically not on the listing of centralized trading platforms, and people usually trade existing tokens on the platform with Korean won. Moodeng was recently listed on Bithumb, and I think this might bring some changes.
However, Dogecoin is quite popular in Korea, but I bet many people may not know that Dogecoin actually has no supply limit. Recently, people just think of Dogecoin as being equal to Musk, and Musk has a good relationship with Trump now, who is about to become president, which makes Dogecoin very bullish.
But overall, once a token's price starts to soar in Korea, it leads to a massive influx of capital, pushing the price even higher, as people sell off other assets to invest in Dogecoin or other tokens that are on the rise. This is another manifestation of the FOMO effect; I even think many people are trading Solana in Korea, but they do not 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 assets are there in Korea?
Andy: I think this is mainly because Solana is a globally popular token. You will see that many globally popular tokens like Solana are favored by Koreans. But you will also see some tokens that are not very popular or have not been heard of in other regions still have a large trading volume in Korea, like Aptos, whose token APT has the highest trading volume in Korea globally.
In Korea's crypto market, there are some special phenomena, for example, many people buy tokens like SEI and SUI purely because they sound like girls' names. There is even an internet culture joke circulating that 'buying SEI and SUI will help you find a beautiful girlfriend.' Similar situations exist with APT, which means 'apartment,' so people say, 'If you buy APT, you can buy an apartment; if you buy ONDO, you can 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 Korea having huge trading volumes here, just because many people don't really understand them but still buy them on a whim; it's really crazy.
BlockBeats: Is the recently popular song by Roise (APT) also one of the influencing factors?
Andy: Aptos has been very popular even before this. In fact, this is a case I studied to see what the Aptos team did right, and how projects like IQ or Frax can enter the Korean market and succeed like Ondo or Aptos. I think this is also why the founders of Aptos often come to Korea. I see him often now and am no longer surprised, so the way the Korean market operates is indeed a bit strange.
But one thing is for sure: first, many trades occur on centralized trading platforms; second, people haven't done much in-depth research. I think it can be summarized like this: meme coin traders in other parts of the world trade meme coins, while in Korea, people don't trade meme coins but use the trading methods of meme coins to trade other cryptocurrencies.
BlockBeats: Recently, the price of XRP surged, and its trading volume on Upbit even temporarily surpassed that of Binance. Why is XRP so popular in Korea?
Andy: XRP has actually been popular in Korea for five, six, or seven years. I remember the first cryptocurrency I bought was XRP, and at that time, I didn't even know what I was buying; I wasn't yet in the industry, 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 Korea did not diminish.
This is a bit like EOS. Now, not many people may be talking about it, but there is still an active EOS community in Korea, and occasionally the price can surge due to Korean influence. As for why EOS was so popular, I can't really say.
The popularity of Ripple, I think, is because 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 definitive answer, but I can say for sure that Ripple is indeed very hot in Korea. Especially after they defeated the SEC, its popularity surged again.
So I think for a token to become popular in Korea, it first needs to gain some recognition on a global scale before entering the Korean market. But this is not the case for every token; Aptos seems to have risen in Korea first.
However, I also know that most traders, including myself, do not participate deeply in the XRP ecosystem. I don't know much about their technology and specific progress. Moreover, many people learned that they are going to launch their own stablecoin, which I think might be a factor driving the market. In 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 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 companies in Korea invested a lot of funds, resulting in huge losses. Many institutions were severely impacted. So, apart from stablecoins like USDT and USDC, the narrative around stablecoins in Korea is still not very good.
BlockBeats: Another interesting phenomenon is the high premium issue on Korean trading platforms. Are Korean investors aware of this, or what is their attitude toward it?
Andy: Yes, they definitely know about 'kimchi premium.' Years ago, some people would buy on one platform with a credit card and then sell on another platform, easily making a 10% profit. However, this system has now been banned, but they certainly know about this phenomenon.
For example, during the recent martial law, Bitcoin plummeted 40% on Upbit and Bithumb in just 10 minutes. I am sure many people tried to buy low and then sell on Binance or wait for it to rebound, but based on my conversations with some people, this arbitrage strategy was very difficult to execute at that time because both Upbit and Bithumb were frozen, making deposits and withdrawals impossible.
I've even heard that due to the current unstable situation of the South Korean government, some people will place orders in advance, and when the market experiences extreme declines again, they can automatically execute and receive chips at ultra-low prices.
On December 3rd, due to the impact of the martial law announcement, BTC experienced a serious negative premium situation of 40% on Korean trading platforms like Upbit and Bithumb; image source from the internet.
BlockBeats: It seems that Korea's cryptocurrency tax policy has been postponed repeatedly. Is everyone concerned about this?
Andy: They care a lot about this. Every time it comes to a critical moment, the politicians running for election will include delaying tax collection or conducting in-depth research on related policies as part of their campaign agenda. Korea has already experienced three tax delays here, each time pushing it back by two years, and now it's another two years. However, as far as I know, the new president is not so optimistic about cryptocurrencies, which makes some people worried. But in any case, the issue of cryptocurrency taxation is a topic of great concern to people, and everyone is paying close attention to it.
