South Korea's cryptocurrency market is cooling rapidly. While investment size and trading volume have both been cut in half, demand for stablecoins has instead risen.
Crypto Investment Halved as Money Flees, Trading Plunges
According to data submitted by the Bank of Korea to Rep. Cha Kyu-geun of the Rebuilding Korea Party, a member of the National Assembly's Finance and Economy Planning Committee, domestic virtual asset holdings totaled 60.6 trillion won ($44 billion) as of the end of February this year, the central bank reported Wednesday.
The figure represents the combined virtual assets, valued at month-end market prices, held in accounts at Korea's five major exchanges: Upbit, Bithumb, Korbit, Coinone and Gopax.
The scale of the decline is striking. Virtual asset holdings peaked at approximately 121.8 trillion won at the end of last year but fell to about half that level by the end of February. Trading has also contracted sharply. Average daily trading value surged from 2.7 trillion won at the end of August 2024 to 17.1 trillion won in December, but plunged to around 4.5 trillion won by the end of February this year. Korean won deposits, considered investment reserves, also fell from 10.7 trillion won at the end of December 2024 to 7.8 trillion won as of the end of February.
Experts cite the following factors behind the trend: rising domestic and overseas stock markets, falling cryptocurrency prices, and diminished investment appeal. Hong Sung-wook, an analyst at NH Investment & Securities, said, "Investment funds shifted amid the stock market rally, and the decline in cryptocurrency prices likely had a significant impact."
'Dollar Coins' Rise Instead… Stablecoins Surge
On the other hand, one notable change stands out: an increase in stablecoin holdings. Stablecoins are coins pegged to the value of specific assets such as the dollar and are characterized by relatively low price volatility. Korean investors' stablecoin holdings maintained a relatively large scale at 88.5 billion won at the end of July 2024, 872.3 billion won at the end of December 2024, and 607.1 billion won at the end of February 2025.
Analysts attribute this largely to the impact of a rising exchange rate. As the dollar's value climbed, demand for dollar-based assets grew, and many investors chose stablecoins as an alternative. Kim Min-seung, head of Korbit's research center, said, "Fluctuations in the won-dollar exchange rate appear to have influenced demand for stablecoin investment." He added, "Because most coins were also weak on overseas exchanges, some investment funds that had flowed out have returned to the domestic market."
