South Korean Won Tops US Dollar in Crypto Trading Volume for Q1 2024
Key Insights:
- The South Korean Won has overtaken the US Dollar in crypto trading, reaching over $456 billion in volume due to intense fee competition among exchanges.
- Fee wars among South Korean exchanges propel Won’s trading volume, with Upbit leading despite Bithumb’s temporary surge from zero-fee transactions.
- Hong Kong’s approval of Bitcoin ETFs may further boost Won’s crypto trading dominance, contrasting with the uncertain future of US Ether ETFs.
The South Korean Won has overtaken the US Dollar as the world’s most-traded fiat currency against cryptocurrencies in the first quarter of 2024. According to a recent report released by Kaiko, a prominent research firm, over $456 billion worth of transactions were conducted in Won on centralized crypto exchanges. This narrowly surpasses the trading volume of the US Dollar, which recorded transactions amounting to $455 billion during the same period. The Euro, in comparison, saw its trading pairs accumulate a cumulative volume of $59 billion, securing the third position for the first quarter.
The report by Kaiko suggests that a combination of an improving macroeconomic environment and intense competition among South Korean crypto exchanges contributed significantly to this surge. The competition, often referred to as a “fee war,” led to an increase in trade volumes on Korean platforms, reaching a peak not seen in over two years by early March 2024.
Dynamics of the Fee War among Exchanges
The competitive landscape among South Korean crypto exchanges has notably intensified, with major players like Upbit, Bithumb, and Korbit adopting aggressive strategies to capture market share. Upbit has maintained its position as the region’s leading exchange, commanding over 82% of the market since 2021.
However, the recent bull run in the cryptocurrency market has spurred Bithumb and Korbit to launch campaigns offering zero fees on transactions. This move significantly impacted the market dynamics, with Bithumb’s market share tripling in the aftermath of its zero-fee policy initiation in October 2023. Despite the increase in trade volume, Bithumb’s revenue plummeted by 60% in 2023, leading to the discontinuation of its zero-fee campaign in February 2024.
The report highlights that although trading volumes for the Korean Won slightly declined in early April, a rebound is anticipated. This expectation is tied to the approval of spot Bitcoin and Ether exchange-traded funds (ETFs) in Hong Kong, which is likely to have a positive impact on the market.
The Impact of Regulatory Development
Regulatory approvals play a crucial role in the dynamics of cryptocurrency markets. Hong Kong’s Securities and Futures Commission (SFC) recently approved three spot Bitcoin ETFs, Harvest Global Investments, China Asset Management, and a partnership between HashKey and Bosera Asset Management. These ETFs are set to list on the Hong Kong Stock Exchange. The listing process, expected to take approximately two weeks, is anticipated to catalyze a post-halving rally for Bitcoin.
This development contrasts with the regulatory stance in the United States, where the approval of spot Ether ETFs remains uncertain. Jan van Eck, CEO of investment firm VanEck, expressed skepticism regarding the U.S. Securities and Exchange Commission’s (SEC) likelihood to approve spot Ether ETFs in May 2024. Despite VanEck and ARK Invest being among the first to file for such ETFs in the U.S., expectations are set for a potential rejection of their applications.
Market Outlook and Future Trends
The first quarter of 2024 has marked a significant milestone in the cryptocurrency trading landscape, with the South Korean Won emerging as a dominant force. This shift underscores the dynamic nature of the global crypto market, influenced by regulatory developments, competitive strategies among exchanges, and broader macroeconomic factors. As the industry continues to evolve, the strategies adopted by exchanges in South Korea, along with the regulatory environment in different jurisdictions, will likely shape future trends in cryptocurrency trading volumes and market dynamics.
The forthcoming listings of Bitcoin ETFs in Hong Kong and the ongoing regulatory deliberations in the United States exemplify the global nature of the crypto market. These developments not only reflect the growing acceptance of cryptocurrencies as legitimate financial assets but also highlight the complexities and challenges associated with regulatory harmonization across different regions.
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