Bitcoin (BTC) is trading at a growing premium on Upbit, one of South Korea’s largest cryptocurrency exchanges, as South Korean traders seek refuge in digital assets amid a sharp decline in the value of the won.
The South Korean currency has hit its lowest level against the US dollar since the 2008 financial crisis, triggering heightened demand for BTC as a protective asset.
Bitcoin premium widens on South Korean exchanges
The price disparity for BTC on South Korean exchanges has expanded significantly. While Bitcoin traded at $94,574.92 on major international exchanges, it was priced at $96,722.63 on Upbit, reflecting a gap of over $2,000. Similarly, on Bithumb, BTC traded at $96,571.21, though the premium was slightly lower. This widening premium highlights a growing demand among South Korean investors for cryptocurrency as the win weakens.
The South Korean won premium increased rapidly on worries about currency devaluation. | Source: Cryptoquant
Although trading activity in the Korean won market accounts for just 1.78% of all global BTC transactions, the rising premium indicates a localized rush into Bitcoin. This shift comes amid accelerated losses in the value of the won, which began sliding sharply against the dollar in October. The premium typically moves in tandem with broader market trends, but recent volatility in the Korean won has created an outsized impact.
Surge in Crypto Investment Amid Economic Concerns
The won’s slide to levels not seen in over 15 years has raised concerns about South Korea’s economic outlook. As incomes stagnate, cryptocurrency is increasingly seen as an attractive alternative investment. According to the Bank of Korea, domestic crypto investors surpassed 15 million for the first time 2024.
In recent months, we have seen a sharp uptick in activity. Since October, 610,000 South Koreans have entered the crypto market, with the country’s overall crypto participation now at nearly 30% of the population. Most trades occur on centralized exchanges such as Upbit, Bithumb, Coinone, Korbit, and GOPAX. These platforms remain largely inaccessible to international traders, limiting arbitrage opportunities.
Regulatory oversight and shifting investment trends
South Korea has introduced stricter oversight under the Virtual Asset User Protection Act, enacted in July. This regulatory framework has allowed authorities to track crypto activity more closely, revealing that trading volumes on local crypto exchanges hit $100 billion in November. This figure surpasses activity on the country’s KOSPI and KOSDAQ stock markets, underscoring a shift in investor sentiment.
Political uncertainty has further fueled the demand for cryptocurrencies. Recent events, including a brief declaration of martial law, have raised concerns about South Korea’s stability. Investors are increasingly reallocating funds from traditional markets into digital assets. While average holdings among South Korean investors were valued at under $2,500 in mid-2024, this figure more than doubled to $5,000 by the year’s end, driven by Bitcoin’s late-year rally.
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