The largest cryptocurrency exchange in South Korea has seen a 75% decline in daily trading volume from its peak this year, suggesting that the frenzy surrounding trading alternative cryptocurrencies, or altcoins, has subsided and that digital assets other than the market leaders bitcoin (BTC) and ether (ETH) may find it difficult to hold onto their high valuations.
According to statistics provider CoinGecko, Upbit, which provides trading in 309 pairs and covers 192 cryptocurrencies, only recorded $3.79 billion in activity over the previous day. That is a decrease from the $15 billion peak reached on March 5, according to TradingView data, when the entire market capitalization of altcoins reached a two-year high of $788 billion. Since then, the market cap has remained stable at roughly $750 billion.
“As a wave of altcoin activity hit the market in early March, cryptocurrency trading volumes started skyrocketing,” Matrixport stated in a Telegram broadcast. “This frenzy was sparked by the expectation of the Dencun upgrade with cheap transaction costs, and certain political circumstances elevated cryptocurrencies to the fore in the political race. The viability of the cryptocurrency surge is called into doubt, though, as volumes are dropping.”
Due to the surge in risk-taking in other cryptocurrencies, such as meme coins, following Ethereum’s Dencun upgrade and bitcoin’s ascent to all-time highs above $70,000, Upbit’s daily volume surged from $2 billion to $5 billion in just two weeks. The trading craze was so intense that at one point, volumes on cryptocurrency exchanges based in South Korea exceeded activity on the local stock market.
The two biggest cryptocurrencies by market capitalization, ether and bitcoin, don’t seem to be as popular among South Korean cryptocurrency enthusiasts as altcoins. According to a DeSpread Research report from October, Upbit’s investors are mostly concerned with maximising earnings from altcoins and are generally willing to take on the significant risks involved with them. Compared to Coinbase (COIN), which is listed on the Nasdaq, whose activity is mostly focused on BTC and ETH, Upbit’s total volume is less dominated by trading pairings for bitcoin and ether.
Just over 9% of the $3.8 billion 24-hour trading volume was made up of bitcoin-Korean won and ether-won trading pairs as of the time of writing. The remaining amount originated from trading pairings between altcoins and fiat currency.