The South Korean Crypto Market Shows Signs of Recovery in 2023
Despite a challenging year in 2022, the South Korean cryptocurrency market has experienced a surge in momentum in 2023. According to a report from the Korean Financial Intelligence Unit (KOFIU), the market valuation has increased by 46% to reach 28.4 trillion won (approximately $21.08 billion) between January and June 2023. This is a significant improvement from the dip to 19.4 trillion won in 2022.
However, it’s important to note that crypto investments have not yet reached the highs of 2021, as highlighted by KOFIU. The market closed at 55.4 trillion won (about $40.9 billion) during the peak of the crypto boom in 2021, indicating that the current uptick is still down by 48.5% compared to that period.
KOFIU conducted its survey on 26 highly liquid cryptocurrency exchanges and investment firms, as well as nine crypto wallet and custody providers, bringing the total to 35 crypto-facing businesses. The report also revealed an increase in the number of listed assets, with cryptocurrency listings rising from 1,362 in 2022 to 1,399 in early 2023.
The average daily trading volume from January to June 2023 was approximately 2.9 trillion won (about $2.19 billion), which represents a slight decrease from the final quarter of 2022. Additionally, there has been a decline in the number of cryptocurrency investors, dropping from 6.27 million in 2022 to 6.06 million traders in 2023.
Crypto Firms Face Challenges
The year 2022 proved to be a difficult period for crypto-facing businesses, following the industry’s remarkable growth in 2021. The sector faced major macroeconomic events and industry-related issues. One notable event was the collapse of the Terra blockchain, which led to a significant drop in market value.
Furthermore, the FTX exchange experienced a downfall, and its CEO, Sam Bankman-Fried, faced fraud-related charges from US authorities. These incidents have negatively impacted confidence in the crypto market and trading firms.
KOFIU’s report revealed that around 10 surveyed crypto trading firms struggled to maintain operations due to a decline in trading volumes and transaction fees earned. Additionally, crypto fundraises dropped to $2.1 billion per quarter for most cryptocurrency exchanges during the crypto winter.
Despite these challenges, there is a ray of hope as the total operating profit has increased by 82% from its 2022 close.
Hot Take: South Korean Crypto Market Shows Resilience Amidst Challenges
The South Korean cryptocurrency market has demonstrated resilience by rebounding in 2023 after a tough year in 2022. Despite not reaching the heights of 2021, the market has shown signs of recovery with a significant increase in valuation. However, challenges such as declining investor participation and struggles faced by crypto firms highlight the impact of macroeconomic events and industry-related issues.
While confidence may have been dampened, there is still optimism for the future as evidenced by the increase in total operating profit. The South Korean crypto market continues to adapt and evolve amidst changing circumstances, positioning itself for potential growth in the coming years.
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