The latest Financial Stability report from the Bank of Korea (BOK) shows that retail investors in South Korea are shifting from aggressive buying to strategic profit-taking, raising questions about the impact on global market trends.
This means that, although Bitcoin has surpassed the 100,000 USD mark this year, South Korean investors are choosing to take profits instead of continuing to “hold.”
The outstanding trading activity in South Korea shows signs of cooling down.
South Korea has long been a significant player in the global cryptocurrency market. Despite a relatively small population, trading pairs with the won (KRW) consistently rank among the top 2 fiat currencies with the largest trading volumes in the world, often equal to or surpassing the USD during peak times.
However, the latest report from the BOK indicates a distinct change in investor behavior. While the turnover rate of the crypto market in South Korea remains high at 156.8%—far exceeding the global average of 111.6%—the nature of activity is different. Instead of continuously buying heavily when prices rise, retail investors in South Korea now primarily choose to take profits during the price increase in 2025.
“The domestic cryptocurrency market’s high turnover rate is due to the fact that most participants are retail investors, who often have a tendency to trade short-term to realize profits,” the Central Bank remarks.
Concentration risks and concerns about market structure.
The report also shows that the market is highly concentrated: the top 10% of investors account for 91.2% of the total trading volume from 2024 to June 2025, according to data from the Financial Supervisory Commission. This raises concerns that a small number of individuals could manipulate prices.
The unique legal environment in South Korea—where companies and foreign investors are banned from trading on domestic exchanges—has made the market almost entirely belong to retail investors. The absence of professional market makers has led to tight liquidity, exemplified by Tether rising fivefold on Bithumb during the steep decline in October.
Global spillover effect.
Whenever South Korean investors reduce trading, the global market tends to “shake.” Historical data shows that during major growth periods in 2017 and 2021, exchanges like Upbit and Bithumb often led the world in volume. The Kimchi Premium phenomenon—when crypto prices in South Korea are higher than international prices—has also become an indicator of the “excited” sentiment of retail investors.
The current change towards profit-taking may be the reason why the price increase in 2025 will be more cautious than previous cycles. When retail investors in South Korea are no longer a significant buying force, global order books also lose strong buying power during important accumulation phases.
This is not an independent change. A previous report from the BOK explains that the gloomy crypto market is due to the strong surge in domestic stocks. The KOSPI index has increased by over 70% since the beginning of the year to become the strongest large-cap index globally, thanks to AI-related stocks like Samsung Electronics and SK Hynix.
The daily trading volume on major crypto exchanges in South Korea has dropped by more than 80% compared to the peak in 2024, as investors shift their capital to stocks and leveraged ETFs in the U.S. “Where are all the retail investors in crypto in South Korea now? The answer: they have moved to the stock exchange next door,” commented expert AB Kuai Dong.
Divergent paths: South Korea compared to the acceptance of global institutions.
Compared to global trends, South Korea is going against the grain. While the Korean market remains a “playground” for retail investors, the international market has shifted to a phase of significant institutionalization since the SEC approved spot Bitcoin ETFs in January 2024. These products have attracted over 54 billion USD in net inflows, with BlackRock's IBIT attracting over 50 billion USD in assets under management.
The BOK also acknowledges this difference, noting that the global crypto market is increasingly tied to the stock market—especially during periods of macroeconomic difficulty or changes in monetary policy. The correlation between Bitcoin and the S&P 500 index has significantly increased since 2020, thanks to institutional participation, corporate fund acceptance, and the popularity of ETFs.
Meanwhile, the South Korean market remains “isolated” from this trend. The Central Bank assesses the cause to be the high concentration of retail investors, weak liquidity, and policies that restrict capital flows, limiting arbitrage activities.
What will happen next: The participation of institutions is approaching.
The report indicates that the differences in the South Korean market will gradually diminish as legal reforms progress. The government has allowed non-profit organizations to sell crypto assets since June 2024 and is currently experimenting with allowing professional investors to trade. Meanwhile, the government is also discussing the approval of spot Bitcoin ETFs.
The BOK predicts that allowing financial institutions and foreign investors to participate will help the market establish a proper “creation” mechanism and mitigate liquidity issues. The presence of institutional investors will also help reduce trading volume volatility and lower turnover rates in the long term.
However, the central bank also warns of certain risks. “As businesses and foreign investors with strong capital and better information enter, crypto prices in South Korea will be more sensitive to supply-demand fluctuations,” the report notes, while emphasizing the need for close monitoring during the transition period.
Final conclusion.
The crypto market in South Korea is at a major turning point. The shift from aggressive buying to profit-taking reflects that investors are becoming increasingly professional, but it also means the world is losing an important stimulus resource. As institutions and new policies develop, South Korea's influence on the global crypto market will gradually shift from the “hot” trading volumes of retail to larger, longer-term capital flows.
At this point, the cycle of retail investors in South Korea “shaking up the market” seems to have ended—a transition that could change how the market reacts in the upcoming cycles.
