Bithumb Ends Commission-Free Trading
The South Korean crypto exchange Bithumb has decided to end its four-month campaign of commission-free crypto trading on February 5. Instead, the exchange will now charge a 0.04% fee for all crypto transactions.
Bithumb vs Upbit: The Battle for Market Dominance
Bithumb has been competing with its biggest rival, Upbit, to regain market share. Upbit has become the leading crypto exchange in South Korea in recent years. Bithumb aims to surpass Upbit by becoming the first South Korean exchange to go public on the KOSPI stock market index.
Commission-Free Trading Boosted Bithumb’s Growth
When Bithumb eliminated commission fees on October 4 last year, it led to increased trading volumes and helped Bithumb gain a larger market share. According to reports, Bithumb’s market share grew from 10% in September to 51% by the end of December.
Financial Performance Concerns
However, critics argue that Bithumb should focus on improving its financial performance rather than offering commission-free trading. The exchange experienced a significant drop in net profits in the third quarter of the previous year.
Bithumb Denies Fees as Main Revenue Source
While fees are considered the main source of revenue for crypto exchanges in South Korea, a Bithumb official denied this claim. The official stated that the decision to offer commission-free trading was made to celebrate the company’s anniversary and gain more market share. However, due to industry norms, Bithumb cannot sustain fee-free trading indefinitely and has introduced a low commission rate of 0.04%.
Efforts to Retain Customers and Rewards Programs
Bithumb is making efforts to address concerns caused by the end of commission-free trading and retain its customers. The exchange is also offering lucrative points-type rewards programs to attract new users.
Hot Take: Bithumb’s Strategy Shift
Bithumb’s decision to reinstate commission fees after four months of offering fee-free trading reflects the intense competition between South Korean crypto exchanges. The move aims to improve the exchange’s financial performance and regain market share from Upbit, which has dominated the industry. While some critics question the sustainability of fee-free trading, Bithumb believes it can retain customers by introducing competitive commission rates. Only time will tell if this strategy shift will help Bithumb achieve its goals in the highly competitive South Korean crypto market.
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