South Korea’s cryptocurrency market slumped sharply in the second half of last year as events such as the Terra Luna crisis and the FTX bankruptcy continued to shake investor confidence.
#cryptocurrency market in #South Korea undergo a significant contraction following #Terra/ #FTX Crisis, operating profit drops 80% in 6 months https://t.co/br7M07OENd
— Kyptos (@azcoinnews) March 19, 2023
On March 19, the Financial Intelligence Unit (FIU) of South Korea’s Financial Services Commission (FSC) announced that it has conducted a fact-finding survey of 36 financial service providers in the second half of 2022 to grasp the current state of digital finance. The country’s currency market.
The survey analyzed several key metrics such as market capitalization, deal size, operating profit, and user accounts.
According to the Financial Intelligence Unit, in the second half of last year, the market value, transaction size and operating profit of the domestic cryptocurrency market all dropped sharply compared with the first half.
On a per-entry basis, the average daily trading volume through the second half of last year was 3 trillion won ($2.3 billion), down 43 percent from the first half ($4 billion). US dollar deposits were US$2.75 billion, down 38% from the first half (US$4.5 billion).
Cryptocurrency trading volume and market capitalization in 2022 in Korea | Source: FSC
The number of cryptocurrencies has also decreased. As of the first half of last year, the number of listings was 1,371, which decreased by 9 to 1,362 in the second half of the year. Even if repeated listings were excluded, it was lower than the number in the second half of last year (638) to 625.
South Korea’s Financial Services Commission said a loss of investor confidence was to blame for the market’s contraction.
“Decreased confidence and continued weakness in the market due to falling prices due to negative events such as the contraction of the real economy, the Terra Luna crisis, and the FTX bankruptcy. There is also the issue of investor confidence.”
On the other hand, price volatility has decreased. The price change in the second half of last year was 65%, down 6%/yr from 73% in the first half.
The number of registered users was 11.78 million, a decrease of 1.32 million (10%) compared to the second half of the previous year (13.1 million). The number of dollar deposits and users, considered as potential future investment needs, also decreased.
In the second half of last year, the Korean won deposit data on the cryptocurrency market recorded 260 million won (200,000 U.S. dollars), a drop of 38% from the first half (450,000 U.S. dollars), and the number of transactions by users was only 6.27 million, which was the same as the first half of the year. The ratio is 630,000.
Monthly Average Daily Deposits (KRW) 2022 | Source: FSC
South Korea’s Financial Services Commission cited a contraction in the real economy due to interest rates and inflation, as well as a drop in confidence due to negative events such as the Luna crisis and the FTX scandal as reasons for the decline in the cryptocurrency market.
On the other hand, price volatility decreases during this period, and prudent money management is the preferred investment strategy. Compared with so-called “Jobcoins”, well-known categories such as Bitcoin have increased their investment share, and the operator’s total operating profit has fallen by about 662% compared with the second half of last year.
The investigation also analyzed enforcement of the “travel rule” when transferring more than 1 million won ($765). Onshore exchanges that comply with the travel rule account for only about 25 percent of the total volume, suggesting more action is needed to combat money laundering.
The findings pointed to many concerns, and the Korea Financial Services Commission said it would work with an independent advisory body among operators to deal with the market crisis. Additionally, the crypto market demonstrates the need for stricter regulation to ensure investor protection and prevent market instability.
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Mingying
according to Kyptos
