Korean investors took money this year, BOK says: global implications
The Bank of Korea's latest financial stability report shows a significant change in behavior among Korean crypto investors—from aggressive accumulation to strategic profitability, raising questions about its impact on global market volatility.
This means that when bitcoin rises above $100,000 this year, Korean investors are cashing out instead of doubling.
Sponsored
Korea's excessive trade shows signs of cooling
South Korea has been punching above its weight in global cryptocurrency markets. Although it represents a fraction of the world's population, the Korean Won (KRW) trading pair ranks among the top two currencies globally by volume, often rivaling or surpassing the US dollar during peak periods.
But the BOK report showed a significant change in investor behavior. While Korea's crypto-overflow rate remains high at 156.8%—well above the global average of 111.6%—the nature of that activity has changed. Instead of chasing rallies, Korean retail investors are now taking profits in the 2025 bull market.
“The domestic crypto market exhibits high rates as most participants seek to profit from short-term trading by individual investors,” the central bank said.
Concentration risks and market structure risks
The report highlights a remarkable level of market concentration: the top 10% of investors accounted for 91.2% of total trading volume from 2024 to June 2025, according to data from the Financial Supervisory Service. This focus creates concerns about the price management of a few players.
Korea's unique regulatory environment—which effectively restricts corporate participation and prevents foreign investors from trading on local exchanges—has created a market that is entirely dominated by retailers. The lack of professional market makers has also led to a lack of liquidity. It is according to the evidence. Tether 5x It spiked on Bithumb during the October market crash.
Sponsored
Global Ripple effect
As Korean traders pull back, global markets take notice. Historical data shows that in the bull runs of 2017 and 2021, Korean exchanges such as Upbit and Bitumb will be ranked first globally. The so-called “kimchi premium”—where Korean crypto prices trade above international benchmarks—has served as a reliable indicator of retail euphoria.
The current shift to profitability has contributed to a faster rate of growth in 2025 compared to previous cycles. With Korean retail investors no longer providing the same level of tender support, global order books have lost a significant source of buying in key collection stages.
The transition is not in a vacuum. A previous report by the BOK attributed the slowdown in domestic crypto to a rising domestic stock market. The KOSPI is up more than 70% year-to-date, the world's top-performing major index, led by AI-related stocks such as Samsung Electronics and SK Hynix.
More than 80% of trading volume on major Korean crypto platforms fell with 2024 peaks as domestic investors moved their capital into stocks and US leveraged ETFs. “Where have all the Korean retail investors in the crypto circle gone? Answer: next door to the stock market,” AB Kuai Dong analyst said.
Sponsored
Divergent paths: Korean versus international institutional adoption
The comparison with international market trends is very high. While Korea remains retail-dominated, global markets have seen rapid institutionalization since the SEC approved Bitcoin ETF in January 2024. These products have attracted more than $54 billion in net revenues, while BlackRock IBIT alone has accumulated more than $50 billion in assets under management.
The BOK report acknowledges this difference, noting that global crypto markets are highly correlated with traditional equities, especially during periods of macroeconomic stress or changes in monetary policy. Bitcoin's correlation with the S&P 500 has risen particularly since 2020, driven by institutional participation, corporate treasury adoption and the proliferation of ETFs.
The Korean market, in contrast, is insulated from these global dynamics. The central bank has created this due to the high concentration of retail investors, liquidity constraints and capital controls that limit arbitrage opportunities.
Sponsored
What's next: Institutionalization on the horizon
The report suggests that the Korean market may be less diverse as regulatory reforms continue. The government has allowed non-profit corporations to sell crypto assets since June, and has since allowed professional investors to trade on a trial basis. Discussions are also underway regarding the approval of a spot Bitcoin ETF.
The BOK projects will allow the participation of financial institutions and foreign investors to help establish a proper market mechanism and ease liquidity constraints. Increased institutional participation reduces volatility in trading volume and lowers volatility over time.
However, the central bank also warns of potential risks. “As corporate and foreign investors with more information and capital enter the market, domestic crypto prices may become more sensitive to supply-demand shifts,” the report said, noting that careful monitoring is needed during the transition.
Bottom line
The Korean crypto market is on an upswing. A shift from strong buying to profit accumulation shows a developed investor base, but also removes the impetus for key global markets. As institutional frameworks develop and regulatory barriers fall, Korea's influence on global crypto dynamics may shift from raw retail volume to sophisticated capital flows.
For now, the time for Korean retailers to single-handedly drive the global rally seems to be running out—a shift that could change market sentiment for cycles to come.
