The latest Financial Stability Report from the Bank of Korea shows a significant change in the behavior of Korean crypto investors. They are no longer buying in droves but are now strategically taking profits. This raises questions about the influence of this on the global crypto market.
This means that even when Bitcoin rose above $100,000 this year, Korean investors sold their coins instead of buying more.
Korean excessive trading activity shows signs of cooling
South Korea has played a significant role in the international crypto market for years. Although the country has few residents, trading pairs with the Korean won (KRW) consistently rank in the top two fiat currencies worldwide in terms of trading volume. Sometimes there is even more volume than with the U.S. dollar, especially during busy periods.
However, the report from the Bank of Korea now shows that investors are behaving differently. The crypto turnover rate in Korea remains high at 156.8% – much higher than the global average of 111.6% – but the type of trading has changed. Instead of chasing the rally, Korean retail investors are now taking profits during the bull market of 2025.
"The domestic crypto market has a high turnover rate because most participants are individual investors who often try to make profits through short-term trading," said the central bank.
Concentration risks and concerns about market structure
The report shows that trading is highly concentrated: the largest 10% of investors accounted for 91.2% of the total trading volume between 2024 and June 2025, according to data from the Financial Supervisory Service. This concentration raises concerns about potential price manipulation by a few large players.
Due to strict regulations in Korea – companies are basically not allowed to participate, and foreign investors cannot trade on Korean exchanges – trading is almost entirely dominated by small individual traders. Because there are nearly no professional market makers, liquidity is often limited, as evidenced by the fivefold increase of Tether on Bithumb during the market correction in October.
The global ripple effect
When Korean traders pull back, global markets feel the impact immediately. In previous bull markets, such as in 2017 and 2021, Korean exchanges like Upbit and Bithumb often ranked at the top of the world in terms of volume. The so-called "Kimchi Premium," where crypto was pricier in Korea than internationally, was always a good gauge of retail hype.
The current transition to profit-taking means that the rally of 2025 is less intense than previous bull markets. Now that Korean investors are buying less aggressively, a key source of buying pressure is missing globally during periods of crypto accumulation.
This shift is not happening lightly. An earlier report from the Bank of Korea indicated that the Korean crypto market is cooling off due to a rapidly rising local stock market. The KOSPI index has already risen by more than 70% this year and is now the best-performing major exchange in the world, especially due to AI stocks like Samsung Electronics and SK Hynix.
The daily trading volume on major Korean crypto platforms has dropped by more than 80% compared to the peak in 2024. Local investors now prefer to put their money into stocks or U.S. leveraged ETFs. "Where have all those Korean retail investors gone? Answer: to the stock market right next door," stated analyst AB Kuai Dong.
Diverging paths: Korea versus global institutional adoption
The difference with the global trend is significant. Korea remains a market for individuals, while abroad institutions are increasingly participating since the SEC approved spot Bitcoin ETFs in January 2024. These ETFs together attracted more than $54 billion in inflows, with BlackRock's IBIT alone managing over $50 billion.
The report from the Bank of Korea mentions these differences. Worldwide, crypto and traditional stocks are increasingly aligning, especially in uncertain economic times or with changes in monetary policy. Since 2020, the correlation between Bitcoin and the S&P 500 has clearly increased, particularly due to institutional participation, companies buying Bitcoin as a reserve asset, and more ETFs.
The Korean market remains relatively insulated from this. According to the central bank, this is due to the high concentration of individual investors, limited liquidity, and capital controls that make arbitrage difficult.
What follows: institutionalization on the horizon
According to the report, this could change as regulations are slowly being adjusted. The government has allowed non-profit companies to sell crypto-assets since June, and professional investors are now allowed to trade test. There is even consideration of whether a spot Bitcoin ETF can be approved.
The Bank of Korea expects that allowing financial institutions and foreign investors can help facilitate good market making and thus improve liquidity. With more institutional trading, volatility in trading is likely to decrease, and turnover will decline over time.
However, the central bank also warns of risks. "If companies and foreign investors with more knowledge and capital enter the market, domestic crypto prices could become more sensitive to changes in supply and demand," the report states. Therefore, careful oversight is needed during this transition.
The conclusion
The Korean crypto market is at a turning point. The shift from mass buying to profit-taking shows that investors are becoming more mature but also removes a key engine from the global market. If institutions participate more and regulations become more lenient, Korean influence on the crypto market may change from purely retail volume to more advanced cash flows.
For now, the days seem to be over when Korean retail investors single-handedly drive global crypto rallies. This could significantly change the pattern of market sentiment for upcoming cycles.
