Representation of Bitcoin cryptocurrency in this illustration taken on Sept. 10, 2025. [REUTERS/YONHAP]
The global cryptocurrency market is rapidly cooling as investors shift money into booming stock markets, raising concerns that Korea’s retail-driven digital asset market may face deeper instability without institutional support.
In the United States, institutional money continues flowing into spot Bitcoin exchange-traded funds (ETFs), despite retail investor trading slowing down. However, channels for institutional investment in the crypto market remain restricted in Korea.
Cumulative trading volume on Korea’s five major cryptocurrency exchanges — Upbit, Bithumb, Coinone, Korbit and Gopax — totaled $222.8 billion from January through March, according to digital asset data platform The Block on Thursday.
That marks a 56.8 percent decline from the $515.46 billion recorded during the first quarter of last year.
Trading activity fell even further in April. Monthly trading volume dropped to $55.1 billion, the lowest level since September 2023. The figure also marked an 85 percent decline from the trading volume of $368.4 billion in December last year.
Cryptocurrency prices are displayed on an electronic board at the Bithumb customer center in Seoul’s Gangnam District on April 15. [NEWS1]
Investor holdings and deposits have also declined alongside trading activity.
Domestic cryptocurrency holdings stood at 60.6 trillion won ($40.6 billion) at the end of February this year, down 50.2 percent from its peak of 121.8 trillion won in January of last year, according to the Bank of Korea.
Korean won-denominated deposits held at exchanges also fell by 27.1 percent from 10.7 trillion won to 7.8 trillion won.
The United States, the world’s largest cryptocurrency market, is experiencing a similar slowdown in retail trading. Coinbase, the U.S.'s largest cryptocurrency exchange, recorded $188.7 billion in spot trading volume during the first quarter, down 51.2 percent from $386.7 billion a year earlier.
Assets held in custody for customers — a measure similar to cryptocurrency holdings — also declined 27.2 percent, from $404 billion in the first quarter of last year to $294 billion this year.
Employees celebrate in front of a screen showing the Kospi closing price at the dealing room of Woori Bank headquarters in Jung District, central Seoul, after the index broke through the unprecedented 7,000-point mark on May 6. [NEWS1]
Analysts say the rapid downturn in cryptocurrency markets has largely been driven by capital shifting into booming global stock markets.
The Kospi index, which stood at 2,481.12 at the end of the first quarter last year, more than doubled to 5,052.46 by the end of the first quarter this year and is now approaching the 8,000 point level.
The benchmark U.S. stock index S&P 500 also rose about 16 percent during the same period, while stock markets in Taiwan and Japan gained roughly 60 percent and 35 percent, respectively, amid expectations of a global AI semiconductor supercycle.
“The retail money has not rotated back into Bitcoin,” said Louis LaValle, co-founder and CEO at Frontier Investments, to MarketWatch. “The retail money is going into tech stocks; it’s going into high-beta stocks. Bitcoin is being left out of the mix.”
Still, in the United States, institutional money continues flowing into spot Bitcoin ETFs even as retail trading volumes and profits decline. U.S. spot Bitcoin ETFs recorded net inflows of about $3.4 billion over the past six weeks as of Thursday, maintaining steady institutional demand.
Reuters described the trend as less a market collapse and more a restructuring of the market around institutional investors as retail trading slows.
Korea, however, lacks a similar institutional support structure because cryptocurrencies are not legally recognized as underlying assets for ETFs under the Financial Investment Services and Capital Markets Act.
Critics say delays of the proposed Digital Asset Basic Act — legislation that would explicitly allow cryptocurrencies to serve as ETF underlying assets — have slowed institutional participation and the introduction of related financial products, leaving the domestic market heavily dependent on retail investors.
“In the United States, even if retail trading declines, institutional funds entering through ETFs act as a buffer for the market,” an industry source said. “In Korea, the market still relies heavily on retail investors, so capital outflows from the cryptocurrency market could become much more severe.”
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
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