South Korean investors have pulled more than $41 billion (60 trillion won) from the domestic cryptocurrency market over the past year, according to data from the Bank of Korea presented to lawmaker Cha Kyu-keun on May 10, 2026. The total value of virtual assets held by South Korean residents plunged to approximately $41.17 billion by the end of February 2026, down from a peak of $82.76 billion in January 2024—a decline of more than 50% in just over 12 months.
Sharp Contraction in Trading Volume and Liquidity
The exodus is underscored by a dramatic collapse in market activity. Average daily trading volume fell from $11.62 billion in December 2024 to just $3.06 billion in February 2025, a 73.6% drop. Won-denominated deposits—often viewed as reserve funds for future crypto purchases—decreased from $7.27 billion at the end of 2024 to $5.30 billion in February 2025. Analysts describe the situation as a "perfect storm" triggered by a global stock market rally and a parallel downturn in major cryptocurrencies.
Capital Rotation into Equities and Stablecoins
While Bitcoin and altcoins suffered from sustained selling pressure, stablecoin holdings experienced a meteoric rise. They surged from just $60.1 million in July 2024 to a peak of $592.7 million in December 2024, before settling at $412.5 million in February 2025—still more than six times the level from mid-2024. Financial experts cited in local reports attribute this spike to South Korean investors seeking dollar-denominated assets as a hedge against higher exchange rates and market volatility. The report notes, "The shift reflects a general decline in valuation and a turn toward more stable, interest-bearing national and international equity markets."
Bitcoin ‘Kimchi Premium’ Resurfaces
Despite the massive outflow, a peculiar phenomenon has re-emerged: South Korea's Bitcoin price is trading at a premium of nearly 2% relative to global exchanges, with Bitcoin hovering around the $80,000 mark. This "Kimchi Premium" last appeared before the pre-war market shock in 2024, indicating that while institutional and retail capital is rotating out, some short-term speculative demand remains. However, overall sentiment is tilted toward risk-off as investors prioritize liquidity and stable returns.
The Bank of Korea has flagged the rapid shrinkage of the crypto market as a potential risk to financial stability, particularly the decline in won deposits that could affect bank liquidity. Regulators are monitoring whether the trend will accelerate into a full-blown capital exodus.