The South Korean won has ascended to the top spot as the world’s most actively traded fiat currency in the cryptocurrency market for the first quarter of 2024. According to a report by Kaiko, the won surpassed the U.S. dollar with a trading volume exceeding $456 billion on centralized crypto exchanges.
The Catalysts Behind the Won’s Dominance
Kaiko’s research pinpoints a “fee war” among South Korean crypto exchanges as a significant driver of this surge in trading volumes. The report elaborates:
“The macroeconomic improvements and competitive dynamics within Korea have contributed to record trading volumes, with the won achieving its highest levels in over two years by early March 2024.”
In stark contrast, the Euro lagged considerably behind, with crypto trading pairs amassing just $59 billion in the same period, securing a distant third place.
Fee Wars and Market Share Dynamics
South Korea’s leading crypto exchange, Upbit, continues to dominate the market, commanding an 82% share since 2021. The recent cryptocurrency market upswing has sparked even fiercer competition among its rivals, particularly Bithumb and Korbit, both of which implemented zero-fee trading policies in late 2023.
While Korbit’s market share remained marginal, Bithumb saw its market share triple following its zero-fee initiative in October 2023. However, this aggressive strategy led to a sharp 60% drop in Bithumb’s annual revenue, prompting the exchange to end its zero-fee campaign early in 2024.
Future Outlook and International Implications
Although trading volumes for the Korean won dipped in early April, Kaiko anticipates a robust recovery, spurred in part by the upcoming launch of spot Bitcoin and Ether ETFs in Hong Kong. With the Hong Kong financial regulator’s recent approval of three spot Bitcoin ETFs, set to list within the next two weeks, the global crypto trading landscape could see further shifts.
This burgeoning trend underscores the increasing global integration of cryptocurrencies into traditional financial systems and highlights the pivotal role that competitive market dynamics play in shaping the sector.
