South Korean trading speculation on smaller crypto assets skyrocketed last month, leading to domestic volume on centralized exchanges exceeding that in USD.
The development came even as total market volumes fell to their lowest level in three years, according to a report from Kaiko on Tuesday.
“Despite the ongoing rally in June, spot trading volumes fell significantly in the second quarter, to the lowest level since 2020,” said Kaiko.
Even still, in the last trading week of June, volumes on Korean exchanges Upbit and Bithumb witnessed a daily spike of more than $4 billion, with $3.6 billion coming from assets other than bitcoin and ether, according to a new study. facts.
The surge in trading volume across the region was mainly driven by Waves native token (WAVES) and bitcoin cash (BCH), Kaiko said.
In the first quarter of 2023, Upbit grew to become the second largest exchange with a spot trading volume of $208 billion, CoinGecko reported late last month. That’s a significant $86.5 billion increase from the $121.5 billion recorded in the fourth quarter of 2022.
Ki Young Ju, CEO of Seoul-based crypto analytics firm CryptoQuant, told Blockworks government regulations that certain types of strategies and tools were restricted to retail investors only.
“Since Korean exchanges do not have margin trading due to regulation, retail investors tend to invest in alts to take risks for higher profits,” he said. “The country’s government does not allow institutional investors to use Korean crypto exchanges.”
Domestic speculation about bitcoin cash listing on a new crypto exchange backed by Wall Street heavyweights Fidelity, Citadel Securities and Charles Schwab called EDX Markets is one such recent example.
The fervor in Korea and elsewhere has contributed to the asset not being seen above $275 since May 2022, arguably breaking a downtrend against bitcoin that has more or less lasted since its inception as a fork of Bitcoin in 2017.
“The Korean market has always been a very retail-oriented market,” Mathias Beke, co-founder and CTO at market maker Kairon Labs, told Blockworks.
The recent moderate volatility in major cryptos over the past three months, combined with noticeable price movements in BCH, may signal a trend of domestic retail investors putting their money into altcoins, the co-founder added.
Despite activity cooling down since then, the BCH/KRW trading pair now ranks third by volume on the Upbit exchange, making more than $110 million a day, according to CoinGecko data.
That accounts for about 6.3% of all volume, the third highest. In comparison, the bitcoin (BTC) to KRW trading pair on Upbit currently ranks fourth with 4.7%.
CryptoQuant analyst Bradley Park told Blockworks that while BTC and Ether (ETH) make up 58.2% of global trade on crypto exchanges, they only make up 33% on Korean ones.
“About 70% are altcoins, indicating a strong preference for those coins in the region. It is also a very closed exchange that is not easy for foreigners to use,” he said.
Volumes denominated in EUR are falling to their lowest levels in two years
In European markets, trading volume of digital assets on centralized exchanges fell to its lowest level in two years for June, with the largest volume drop coming from Binance, Kaiko said.
The exchange is still under scrutiny across the bloc after failing to secure a license from the region’s largest economy – Germany.
Binance also announced its departure from the Netherlands late last month after failed attempts to register as a Virtual Asset Service Provider with Dutch regulators.
This was repeated a week later by the Belgian Financial Services and Markets Authority, which ordered the stock exchange to cease its activities within its borders.
As such, Binance’s EUR volume share fell sharply from more than 40% in early 2023 to 16% by the end of June, putting a serious dent in EUR-denominated crypto volumes, Kaiko said.
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