Author: 0xFacai, BlockBeats
Recently, with the explosive rise of 'antique coins' like XRP, news about 'Korean aunties rushing into the crypto market' has spread again in the community. Meanwhile, the trading volume of related tokens like XRP and APT on South Korean exchanges like Upbit and Bithumb even surpassed that of Binance at times. This means that in these tokens alone, the trading volume from just the South Korean market is enough to rival the total trading volume from the rest of the world.
For a long time, the crypto community has viewed listing on Upbit as a huge positive for projects. Once a token is listed on these South Korean exchanges, its price often surges rapidly in a short period. This strong buying power has made the world curious about the 'kimchi premium'; how exactly does the South Korean cryptocurrency market operate? What kind of speculation logic do investors here have?
Andy, a member of Frax Finance, which has been engaged in crypto construction and education in South Korea for many years, was interviewed to delve into the investment logic and real situation of the South Korean crypto market.
Korean people's 'another stock market'
BlockBeats: You have a very strong development in the South Korean market, such as large-scale buying, etc. How do people enter the cryptocurrency market, and how do they choose tokens?
Andy: To be frank, this is still a puzzle everyone is trying to solve. One thing I am sure of is that DeFi is quite weak here because the entry and exit of funds from exchanges are very convenient. I am a Canadian citizen who has lived in South Korea for 10 years. In the early days, 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, everyone can very easily enter the crypto market and invest; it is not difficult, although everyone must open an account at a specific bank. Secondly, I believe that the act of trading cryptocurrencies carries a bit of the flavor of 'the dawn of hope' among South Korean investors, especially in the younger demographic of 20 to 30 years old.
And the media in South Korea are discussing this topic; you can see that individuals from their 20s to 60s or even 70s are participating in the crypto market. I don’t know if you’ve heard that the front of Bithumb’s office was once crowded with elderly people aged 50 to 70, trying to open accounts, especially when the new bull market began.
BlockBeats: Is this happening in the last bull market or this bull market?
Andy: Yes, this bull market, just in the last week or two, has been reported in the news.
Retirees aged 50 to 70 are queuing up to open accounts, with the queue even surpassing 3,000; it’s really crazy. Mainstream media and social networks are also talking about the secondary market for cryptocurrencies. Although mainstream media tends to portray its dangers, more and more people are starting to pay attention as Bitcoin hits historical highs.
According to media reports, a nearly 60-year-old housewife said while queuing to open an account: 'It feels wasteful to keep retirement funds in a bank account, so I’m trying to invest in Bitcoin and Dogecoin.'
Back to young people, I find that 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 the media reports they are exposed to often highlight stories of people making a lot of money through cryptocurrencies, which is more attractive than news of 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 friends around me still buy the tokens first and then join the community to ask what the project is, so actually most people do not understand the real situation of the project.
This mindset may stem from a strong FOMO, which is quite common in Korean culture. The trend-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 don’t know what you are investing in, it may be due to the fear of missing out on an opportunity, or because a friend suggested you get involved.
And I lived in Canada, where everything was relatively laid-back; I never felt the pressure of chasing. But after coming to South Korea, I felt the fast-paced lifestyle prevalent in society, such as needing to graduate, serve in the military, get married, find a job, and invest by a certain age. So when the 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, fearing they will lag behind others in investment, especially when they see friends starting to make money; this feeling becomes even stronger.
BlockBeats: Has the DYOR culture (Do Your Own Research) developed in the South Korean cryptocurrency market over the past few years?
Andy: I have been working in the crypto field for seven years and have lived in South Korea all this time. Indeed, I have seen more and more educational and research platforms emerging. Many offline activities and Web2 projects are also getting involved, truly helping people understand and learn about cryptocurrencies. More and more investors are indeed doing their own research before buying tokens, and many KOLs are discussing different areas of cryptocurrency, including NFTs and other projects, and teaching people how to transfer funds from centralized exchanges for airdrops or staking.
However, the huge trading volume on South Korean exchanges often rivals that of Binance primarily because funds mostly stay within the exchanges. For example, when I tell others about a pool with a 100% annualized return, where they only need to transfer tokens from the platform to MetaMask or other wallets and then stake on another public chain, many people give up trying due to the complexity of the process. I think this is an area where our education needs significant improvement. Compared to the US and other places, South Korea still falls far short in DeFi and wallet usage.
Here, most traders are trading on the platform, and funds do not leave the centralized exchanges for personal wallets. Of course, the younger demographic, like those in their 20s and 30s, will indeed do some research 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 South Korea, can we view the crypto market as a market comparable to the stock market, or at least on par?
Andy: I think this comparison is reasonable; I believe at least in terms of media attention, cryptocurrencies really occupy a significant proportion. The frequency of discussions about cryptocurrencies is similar 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 drops, the media's reports might say 'government policies are ineffective' or 'the financial and economic situation in South Korea is poor.' But if Bitcoin suddenly drops by 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 opinion atmosphere 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’s not as dangerous as it seems. If I know nothing about a token and just buy a meme coin following the trend, and then it suddenly drops 80%, I would clearly feel that this is a scam. But if I know beforehand what I am investing in and haven't done enough homework, then losses are to be expected; that is the difference.
BlockBeats: In your opinion, how significant is the impact of negative media reports on South Korean cryptocurrency investors?
Andy: This is an interesting thing; many media outlets have been promoting the dangers of cryptocurrencies, advising people not to participate, but in fact, this may have attracted more people to try. Because many people just follow the trend, not because they truly understand cryptocurrencies.
South Korea is a country that places great importance on trends; whether in music, fashion, or other fields, everyone always chases the latest trends, and the same goes for cryptocurrencies. 'Everyone is investing in cryptocurrency trading, so I have to participate too,' 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?' that’s usually a signal for me to sell some tokens.
But during bear markets, the general public stops discussing Bitcoin, but the market's trading volume 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 of new projects. In South Korea, there are some 'crypto fanatics' who are very smart and well aware of all the latest developments in the crypto market.
Why are APT and XRP the hottest in the cryptocurrency trading logic of South Korean retail investors?
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 exchanges, and people usually trade tokens already available on the platform using Korean Won. Moodeng was recently listed on Bithumb, and I think this may 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 simply think of Dogecoin as equal to Musk, and Musk is now on good terms with Trump, who is about to become president, hence the bullish sentiment on Dogecoin.
But overall, once the price of a certain token starts to surge in South Korea, it leads to a massive influx of funds, pushing the price further up, as people sell off other assets to invest in Dogecoin or other rapidly rising tokens. This is another manifestation of FOMO, and I even think that many people are trading Solana in South Korea, but they are not using SOL to buy meme coins in the on-chain ecosystem.
BlockBeats: Since it’s not for participating in the ecosystem, why bother buying 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 that some tokens that are not very popular or have not been heard of in other regions still have a significant trading volume in South Korea, such as Aptos, whose token APT has the highest trading volume in South Korea.
In the South Korean crypto market, there are some peculiar phenomena, such as many people buying tokens like SEI and SUI purely because they sound like female names, and there are internet cultural memes circulating saying, 'Buying SEI and SUI will help you find a beautiful girlfriend.' A similar situation exists 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 of South Korea have huge trading volumes here, simply because many people don’t understand them but still follow the trend of buying, which is actually quite crazy.
BlockBeats: Is Roise's recent hit song (APT) also one of the influencing factors?
Andy: Aptos was already very popular before this. In fact, this is a case I am researching to see what the Aptos team did right and how projects like IQ or Frax can enter the South Korean market and succeed like Ondo or Aptos. I think this is also why the founder of Aptos often comes to South Korea; I see him frequently now and am no longer surprised, so the way the South Korean market operates is indeed a bit strange.
But it can be said with certainty that, first, many trades happen on centralized exchanges; 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 instead trade other cryptocurrencies in the manner of trading meme coins.
BlockBeats: Recently, XRP's price skyrocketed, and its trading volume on Upbit even surpassed that of 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 even seven years. I remember the first cryptocurrency I bought was XRP when I had no idea what I was buying; I hadn’t entered the industry yet and was just a college student. At that time, my relative told me, 'Buy this coin called XRP, it will rise to 10 dollars,' 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 prices can surge due to support from Korea. As for why EOS was so popular, I can't quite say.
And the reason Ripple is popular, I think, is that people believe it is the 'next big event,' especially when it fights against the government and wins; that narrative becomes especially strong, particularly in the United States. 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 believe for a token to become popular in South Korea, it must first gain 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 delve deeply into 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, which I think could 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 significant 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 saying that some people 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, but ended up suffering huge losses; many institutions were severely hit. 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 exchanges; are South Korean investors aware of this, or what is their attitude towards it?
Andy: Yes, they absolutely know about the 'kimchi premium.' Years ago, someone would buy on one platform with a credit card and then sell on another platform, easily making a profit of 10%. However, this system has been banned now, but they certainly know about this phenomenon.
For example, during the recent declaration of martial law, Bitcoin plummeted by 40% on Upbit and Bithumb within 10 minutes. I am sure many people tried to buy at the 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 Bitdump were frozen, preventing deposits and withdrawals.
I even heard that due to the instability of the current situation in the South Korean government, some people place orders in advance so that when the market experiences extreme drops again, they can automatically execute and grab ultra-low price chips.
On December 3rd, due to the impact of the martial law declaration, BTC at South Korean exchanges like Upbit and Bithumb experienced a severe 40% negative premium.
BlockBeats: It seems that South Korea's cryptocurrency tax policies have been postponed for a long time; are people concerned about this?
Andy: They are very concerned about this. Whenever it comes to a critical moment, the politicians running for office include delaying taxes or in-depth research on related policies as part of their campaign agendas. South Korea has experienced three tax delays here, each time postponed 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. But in any case, the issue of cryptocurrency taxation is a topic of great concern and attention among the public.
