South Korea’s cryptocurrency market sentiment has drastically deteriorated following 2018’s crypto winter that saw Bitcoin’s price plummet by over 80%, dragging the rest of the market along with it. The grave loss of funds in a market wipeout has however not caused total annihilation of the market as investors moved their funds towards blockchain development.
South Korea’s Ailing Crypto Market
As the country’s gold rush in digital currencies reached fever pitch in late 2017-early 2018, exchanges in the country were selling Bitcoin at a premium as Korean won trade volumes skyrocketed. In fact, the demand levels for cryptocurrencies across exchanges in the country were so overpriced that Coinmarketcap excluded some pairs from its index.
However, the sentiments have changed following the prolonged crypto bear market in 2018. In a post by Longhash on the current state of the South Korean crypto market, Erica Kang, founder of community KryptoSeoul, said,
“It’s dead. The retail side has diminished dramatically. The exchanges have been suffering so much. I can’t even mention price with retail investors because they are so angry about how much money they lost.”
According to the post, only 2% of Bitcoin trades use the Korean won and less than 0.3% of Ethereum (ETH) trades across exchanges are completed using the fiat currency – a fall from the peak volumes of about 40% during the Bull Run.
Furthermore the government’s recent ban on initial coin offerings does not help the cause of cryptocurrencies, nor does the recent Upbit hack that saw over $50 million worth of crypto stolen from the exchange.
Resilient Industry Fundamentals Push South Korea Towards Blockchain
Despite the troubles across the cryptocurrency industry and diminishing interest in trading Bitcoin and its trail of altcoins, the country has remained appreciative of the benefits that blockchain technology offers. Ethan Kim, a partner at blockchain accelerator Hashed, believes the low prices in the market is the cause of the accelerated development in blockchain across the country.
“When the prices go down, projects are more legitimate. Founders who have a more proven track record are jumping into the crypto scene and developing their projects very seriously. I think this is a good signal for the ecosystem.”
Well, Kim is in no way wrong as stats shows increasing positive sentiments in blockchain developments as capital flows into the industry. ICON LOOP, one of the most noticeable blockchain projects raised $8.4 million USD in October to extend its developments. The company had in August announced it will implement blockchain based certification on Korean Art.
Furthermore Terra, run by Korean ecommerce giant TMON’s founder Daniel Shin, handled over $54 million USD worth of transactions in its first four month of opening. The platform allows users to gain up to 10% in discounts to use its stable coin for purchases.
With the government also playing its role in promoting blockchain, such as the Korea Internet Security Agency (KISA) pledging over 10.5 billion won ($9 million USD) to blockchain startups starting 2020, the industry looks to flourish despite the cryptocurrency market currently being in limbo.