Over ₩110 billion has left South Korea’s crypto platforms for offshore exchanges, draining native order books and dragging market depth to recent lows, in response to Kaiko.
Whereas Korean exchanges nonetheless course of large commerce numbers, their design is reportedly locking out flexibility, as retail exercise stays excessive, however the market construction has barely advanced. Merchants in South Korea are caught with chunky worth increments that gradual execution and make precision buying and selling practically inconceivable.
And sure, UPbit nonetheless leads the pack, however dominance doesn’t imply immunity. The outflows show that deeper liquidity doesn’t equal higher liquidity when execution prices are going up.
Massive ticks limit order books and gradual trades on native Korean exchanges
KRW markets on exchanges like UPbit and Bithumb have all the time run on giant tick sizes. The rationale? Stability. Larger ticks assist filter out noise and tame speedy swings. It retains the order e book clear, particularly for the nation’s military of retail merchants. However that stability comes at a value, and South Korea is feeling it now.
Every alternate decides how small or giant a tick is, and that controls how finely costs can change. On Korean platforms, orders clump collectively on the identical ranges, which may make depth look sturdy, however this additionally means spreads are wider, so merchants find yourself paying extra simply to get in or out.
UPbit divides its markets into three: KRW, BTC, and USDT. The KRW market contains pairs like XRP/KRW.
In line with Kaiko, UPbit owned about 70% of the nation’s whole buying and selling quantity all through 2025, whereas Bithumb got here second, and Coinone + Korbit barely register as compared.
Transaction volumes surge laborious throughout international shocks, like when Donald Trump took workplace once more or in the course of the October 10 inventory crash.
By the tip of 2025, the market in South Korea had principally narrowed down to 2 main gamers. UPbit remained the first vacation spot. Its edge got here from dealing with extra trades on extra standard KRW pairs.
That dominance additionally meant greater reported depth and smoother processing. However all that floor power hasn’t stopped funds from flying offshore.
Korea’s crypto liquidity will get squeezed by regulation, shocks, and worth rallies
Actual-world occasions and token habits are reshaping the best way South Korea handles crypto liquidity. One standout challenge is the Kimchi premium. It occurs when Korean exchanges present greater costs than overseas platforms, particularly for Bitcoin.
This premium doesn’t final lengthy, but it surely retains popping up. When it does, merchants soar on arbitrage alternatives, yanking liquidity throughout borders.
That dynamic flipped once more when Bitcoin hit new highs throughout 2025, as bull runs introduced new capital into the system. Spreads tightened. Order books stuffed out. High pairs turned extra lively. Merchants rushed in, which strengthened depth and made trades simpler to execute. In contrast to the martial regulation episode, this sort of surge constructed a loop. Excessive costs attracted quantity, which fed liquidity, which helped execution.
The Kimchi premium, political shocks, and bull cycles present how unstable South Korea’s liquidity actually is. Worth gaps preserve returning. Regulation and volatility drain books in a single day. And excessive costs provide solely a short lived repair.
