Trading activity on South Korea's major cryptocurrency exchanges has contracted sharply over the past year, even as the country's stock market rallied to record highs, suggesting that retail speculative interest may be rotating toward equities, according to a Cointelegraph analysis.

The Korea Composite Stock Price Index (KOSPI) rose 114.44% over the 12 months ending July 22, per Yahoo Finance data, despite pulling back from its June peak. Over the same period, trading volumes across the country's largest won-based crypto platforms declined significantly.

Cointelegraph reviewed CoinGecko's historical 24-hour volume readings for Upbit, Bithumb, Coinone, Korbit, and Gopax, comparing seven-day windows in July 2025 and July 2026. The simple, unweighted average of the five exchanges' year-over-year declines came in at approximately 77%, giving each platform equal weight regardless of its individual trading volume.

On a combined basis, however, the picture is starker: average daily volume across the five exchanges fell roughly 89%, dropping to $305 million from $2.82 billion in the comparable July 2025 period.

ZDNet Korea separately reported that combined daily volume across the five platforms was down 88% year-on-year as of Monday. The outlet noted that declining fee income had pushed some exchanges to liquidate crypto holdings. Korbit, for instance, raised approximately 1.6 billion won (about $1 million) by selling 15 Bitcoin (BTC) and 60 Ether (ETH).

South Korea ranks among the world's most active retail crypto markets, historically notable for the "kimchi premium" — a phenomenon where token prices on Korean exchanges trade above global averages due to capital controls and intense local demand. The country's exchanges depend heavily on trading fee revenue, and a sustained shift toward equities could reduce crypto market liquidity and pressure smaller platforms, altering how local investors distribute capital across speculative assets.

Retail Fatigue Opens Door for Institutional Participation

A Tiger Research report published on CoinGecko and last updated on April 17 argued that South Korea's declining crypto activity reflects factors beyond weaker token prices. Recycled narratives and projects that failed to deliver on promises contributed to investor fatigue, while the KOSPI rally provided retail traders with alternative avenues for returns.

Tiger Research noted that the widening gap between equity turnover and crypto volume does not necessarily indicate that Korean investors have abandoned crypto. Rather, they now have more options competing for their capital.

Related: South Korea eyes September launch for second phase of CBDC pilot: Report

The report characterized the market as being in a structural transition, with retail investors pulling back while institutions gradually enter. Banks and financial conglomerates were already positioning themselves around won-denominated stablecoins, tokenized real-world assets (RWAs), and exchange investments even before relevant legislation was finalized — a signal that South Korea's crypto sector is evolving from a retail-driven trading market toward a more institutionally structured ecosystem, even as the regulatory framework continues to take shape following the implementation of the Virtual Asset User Protection Act in July 2023.

Tiger Research suggested that institutional activity could eventually serve as a healthy substitute for some of the retreating retail participation, though institutions remain in the early stages of establishing their presence.

Magazine: Inside the 'fake police raid' that forced a $1M Bitcoin transfer