Korean crypto buyers show higher risk appetite than global peers

South Korean cryptocurrency investors appear willing to take more risks than their global counterparts, balancing their portfolios between market leader Bitcoin and other virtual currencies, regulatory data showed.

Bitcoin made up 16.6% of the total market value of cryptos traded in South Korea as of the end of June, the Financial Services Commission (FSC) said on Tuesday.

The figure is far below its global weighting of 44%, based on data from CoinMarketCap.

In South Korea, Ethereum represented 9.3% of the market cap, lower than 15% in the global crypto market. Globally, both Bitcoin and Ethereum took half of the crypto market value as of end-June.

By comparison, Ripple (XRP) was the second-most popular coin in South Korea, accounting for 12.5%. In global trade, the token took a mere 2% share of the market.

ADA, Solana and Dogecoin are also among the cryptos with a large presence in Korea.

MARKET SIZE

In aggregate, cryptocurrencies traded in South Korea lost 60% of their value in the first half of this year, with their average daily trading value shrinking by half, the FSC said in a statement.

Their combined market cap reached 23 trillion won ($16 billion) by the end of June, down from 55.2 trillion won a half year earlier.

Bitcoin shed one-third of its value to below $20,000 in the first half of this year.

Despite the reduced market size, the number of market participants increased by 24% to 6.9 million. Men in their 30s led the pack, 66% of whom were small investors, trading less than 500,000 won.

The high-net-worth investors, or those holding more than 100 million won in cryptos, represent 0.4% of them.

During the same period, the daily trading value of cryptos averaged 5.3 trillion won, a 53% plunge from a half-year earlier.

Operating profits at Korea-based crypto exchange operators dwindled by 1 trillion won ($700 million) to 630.1 billion won in aggregate from a half-year earlier.

They slightly lowered trading fees by 0.01 percentage points to 0.16% on average from a half-year earlier. Still, it is much higher than the 0.0027% charged for stock trading.

A plunge in the value of Luna, the cryptocurrency linked to stablecoin TerraUSD, dealt a heavy blow to the crypto market, coupled with rampant inflation, interest rate hikes and the ongoing war in Ukraine.

Increased regulatory scrutiny over virtual assets by developed countries also weighed down the crypto market, the regulatory body said.

Write to In-Hyeok Lee at twopeople@hankyung.com
Yeonhee Kim edited this article.