Crypto Volume in South Korea Plummets 88%: Exchanges Sell Bitcoin to Pay Salaries

While trading volumes on South Korea’s five largest cryptocurrency exchanges have seen a sharp 88 percent year-on-year decline, platforms like Korbit have begun selling their reserves to cover operational expenses.

South Korea, one of the most active markets in the cryptocurrency world, has recently faced a serious liquidity and volume crisis. The daily trading volume on the country’s five major exchanges decreased by 88 percent compared to the same period last year, falling to approximately $280 million as of July 20.

This sharp decline has shaken the financial statements of exchanges that derive a large portion of their revenue from commissions on user transactions. Dunamu, the operator of industry giant Upbit, reported that its revenue decreased by 55 percent and its operating profit by 78 percent in the first quarter of the year. This market stagnation is forcing exchanges to liquidate their digital assets in order to stay afloat.

Liquidity Crisis in South Korean Crypto Exchanges

The most concrete example of these financial difficulties was seen at the Korbit exchange, one of the country’s long-standing platforms. The company announced that it sold 15 Bitcoin (BTC) and 60 Ethereum (ETH) at the beginning of July to maintain its operational activities without interruption. This sale, worth approximately $1.08 million, was recorded as the third asset sale the exchange has conducted this year to provide cash flow.

Data shows that interest from South Korean investors in the market has waned, and this massive erosion in trading volumes is driving exchanges to dispose of their assets. Especially for platforms heavily dependent on commission income, they continue to use their cryptocurrency reserves to survive this challenging low-volume period. The daily trading volume dropping to the level of 412.7 billion KRW is increasing the pressure on the sustainability of local exchanges.