In a report titled ‘Characteristics of South Korean Cryptocurrency Transactions and Their Implications’ issued on February 12, Jun-hwan Im, a senior researcher with the Korea Insurance Research Institute (KIRI), said, “The domestic cryptocurrency market is relatively larger than the domestic financial market or those in other countries in terms of trading volume and characterized by the world’s lowest rate of Bitcoin trading”. As of December 17, 2017, the trading amount of Bitcoin was $ 6.7 billion, which was the highest amount among cryptocurrencies, and it was followed by $ 5.9 billion, ₩ 3.6 billion and ¥ 1.6 billion.
Researcher Im said, “Bitcoin (frequently used in trading cryptocurrency) is the only means of exchange used as if it were currencies used in buying or selling major 50 cryptocurrencies including Ethereum and Ripple, and the US Dollar is the key currency. It is a rather strange phenomenon where the trading volume of cryptocurrency in the Korean currency (instead of the key currency) exceeds those in Euro or Yen.
Korea was cited as the most facilitated market where various types of cryptocurrencies are proactively traded. Bitcoin accounted for 63.4% of the global trading volume of cryptocurrency, and it was decreased to 32.7% in the domestic market. In reality, the amount of the global cryptocurrency trading was $12.14 billion, and the domestic trading volume accounted for about 30% by recording $3.61 billion whereas the trading volume of Bitcoin accounted for only 15.3% by recording $1.18 billion as Bitcoin posted $7.69 billion. Instead, 54.7% of trading of all cryptocurrencies except for Bitcoin took place in Korea.
Why does Korea record a relatively higher rate of cryptocurrency trading compared to the economic scale of Korea? And why does it account for more than 50% of diversified trading of cryptocurrencies? Researcher said, “Many might think that the trading volume of cryptocurrency gets higher when the stock market posts higher trading volume, the trading and financial markets are more opened and the rate of use of the Internet gets higher.”
However, it turns out that there is no consistent pattern compared to the international market.” As for the overseas markets, Indonesia, where the trading and financial markets have yet to be fully opened and the rate of use of the Internet is relatively lower, posts a larger rate of stock trading than cryptocurrency trading whereas the EU member states where the scale of securities markets is larger, the trading and financial markets are more widely opened and the rate of use of the Internet is higher records a relatively lower rate of cryptocurrency trading.
In the meantime, excessive demand caused by a high rate of participation by those in their twenties and thirties who are accustomed to the Internet, a positive outlook for developing blockchain technology, overseas investors flocking from China desiring to bypass regulations and herding investment psychology have turned out to result in the overheated cryptocurrency market in Korea.