South Korea’s crypto trading volume hit a two-year low, dropping below 10 trillion won ($6.7 billion) for the first time since September 2023.

The slump coincides with a dramatic collapse across the country’s stock markets.

Is South Korea Losing Its Crypto Market?

Trading volume measures the total value of assets bought and sold across exchanges over a set period. Weekly volume across South Korea’s five main fiat exchanges hit a two-year low, signaling a sharp cooling in overall market activity.

The five platforms include Upbit, Bithumb, Coinone, Korbit, and Gopax. In the week of July 3 to July 10, combined volume reached roughly 9.97 trillion won ($6.65 billion). Furthermore, that marks a 25.75% drop from the prior week’s 13.4 trillion won total ($8.9 billion).

The decline deepens over time. The current volume is about 43.5% below early June levels, according to WuBlockchain.

It marks the fifth consecutive weekly drop, reflecting a broad retreat in retail speculation nationwide.

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Structural challenges add to the pressure. During the first quarter of 2026, combined volume had already fallen notably, with Bithumb dropping over 30%.

Furthermore, an operational error at Bithumb earlier this year damaged trust among cautious retail investors.

Tighter regulation compounded the caution. New limits on exchange ownership stakes reinforced a defensive mood. Consequently, many retail traders pulled back from the major platforms, deepening the multi-week slide in overall trading activity.

Why Are Crypto and the KOSDAQ Falling Together

The synchronized decline is no coincidence, given how South Korean investors move between tech stocks and crypto. Many traders speculate across both markets, so a decline in risk appetite in one quickly spreads to the other.

The KOSDAQ index has crashed 31% over the past 9 weeks, erasing nearly a full year of gains. That correction rivals the 2020 crash, when it fell 32% in five weeks.

Meanwhile, the KOSPI dropped 20% over three weeks, entering technical bear-market territory.

The AI trade sits at the center of the turmoil. Optimism around artificial intelligence is fading, especially after doubts over chip and semiconductor spending. Samsung and SK Hynix, along with leveraged ETFs, account for over 70% of traded market value, amplifying volatility.

Regulators are now watching closely. South Korea’s finance minister announced tighter oversight of leveraged single-stock ETFs, acknowledging the sector’s risk concentration.

As a result, that intervention adds pressure and pushes capital toward more defensive positions.

Analysts see the contraction as a reallocation, not an exit. Some activity may be migrating toward smaller platforms, DEXs, or traditional assets.

However, lower liquidity on major exchanges means wider spreads, higher volatility, and pressure on platform fee revenue.

Source: BeInCrypto