The Impact of South Korea on Bitcoin: Could This Data Explain the Price Drop?
As Bitcoin and the overall cryptocurrency market continue to experience a sudden decline, intriguing trends have emerged in the data coming out of South Korea.
According to data from the analysis firm Kaiko, South Korea’s Bitcoin (BTC) transaction volume has seen a significant decrease in the second quarter, while the liquidity of major exchanges in the United States has increased.
Recent statistics show that the majority of Bitcoin sales last week occurred on exchanges like Binance and Bybit. However, the trading volume of the top four exchanges in South Korea – Upbit, Bithumb, Coinone, and Korbit – has dropped from an average of $35 billion in the first quarter to $6 billion in early June. This decline comes after the Korean Won (KRW) trading volume briefly surpassed USD trading volume in the first quarter.
The most pronounced decrease was observed at Upbit, which has seen its market share drop to 67%, the lowest level since February, compared to its main local competitor Bithumb.
One possible explanation for this decline could be the easing of risk perception following higher-than-expected inflation in the US and the adjustment of expectations for FED interest rate cuts. Upbit and Bithumb offer a wider range of high-volume trading pairs compared to other exchanges. The top ten pairs by cumulative volume represented only 43% of Upbit’s trading volume, in contrast to 70% on exchanges like Coinbase and Kraken.
Conversely, the bid-ask spread on major US exchanges has significantly narrowed, indicating improved liquidity for Bitcoin. The spread, which measures the difference between the highest buyer price and the lowest seller price, has decreased from 2.3 to 1.9 basis points on Bitstamp, from 1 to 0.3 basis points on Coinbase, and from 0.4 to 0.1 basis points on Kraken.
*Please note that this is not investment advice.
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