In the first quarter of 2024, the South Korean won eclipsed the US dollar to become the most traded fiat currency against crypto-currencies. With trading volume exceeding $456 billion on centralized crypto-currency exchanges, the won narrowly surpassed dollar volume, according to an April 15 research report by Kaiko.
Fee war boosts Korean won's dominance
The rise of the Korean won is mainly attributed to the "fee war" between Korean cryptocurrency exchanges. Fierce competition between these platforms has led to a significant increase in trading volume on Korean exchanges, reaching its highest level in over two years in early March. In the first quarter of 2024, the South Korean won surpassed the US dollar in terms of cumulative trading volume.
Kaiko on X📊Competition on Korean markets is heating up. In this week's Data Debrief, we explore:
— Kaiko (@KaikoData) April 15, 2024
👉The fee war in South Korea
👉The market reaction to Uniswap Labs Wells Notice
👉Coinbase's growing dominance
and more….https://t.co/pVQvJfZIlS
Fee wars intensify between Korean exchanges
Although Upbit has dominated since 2021 with over 82% market share in the Korean crypto-currency space, the recent price surge has intensified competition between rival exchanges. Bithumb and Korbit launched zero-fee campaigns in late 2023. Although Korbit's market share remained below 1%, Bithumb's tripled in the months following the introduction of the zero-fee trading policy in October 2023. However, this aggressive policy led to a significant drop in revenues for Bithumb, which was forced to end its zero-fee campaign just five months after its launch.
Future prospects for the Korean won
Although volumes for the Korean won declined in early April, a major recovery is expected with the approval of Bitcoin and Ether exchange-traded funds (ETFs) in Hong Kong. Indeed, Hong Kong's financial regulator has approved three Bitcoin ETFs, which should be listed on the Hong Kong Stock Exchange in around two weeks' time.
The rise of the Korean won in the crypto-currency world is testament to the changing dynamics of global markets. With increased competition between Korean exchanges and promising regulatory developments in Hong Kong, the future of the won in the crypto landscape is more interesting than ever to watch.
