Despite a turbulent close to 2022, the South Korean cryptocurrency market appeared to have picked up momentum in 2023.
According to a Korean Financial Intelligence Unit (KOFIU) report, the South Korean crypto market surged 46% to attain a valuation of 28.4 trillion won (about $21.08 billion) between January and June 2023.
This follows a dismal 2022, which saw the market valuation dip to 19.4 trillion won.
Despite this upswing, the anti-money laundering agency (KOFIU) argued that crypto investments have not yet reclaimed the highs of 2021.
According to its press release, the performance of the first half of 2023 is significantly lower as the nascent industry closed at 55.4 trillion won (about $40.9 billion) at the height of the crypto boom.
This figure indicates that the uptick of the first half of 2023 is still down by 48.5% compared to its 2021 close.
Shedding light on how it garnered its result, KOFIU stated that it carried out its survey on 26 highly liquid cryptocurrency exchanges and investment firms.
The unit also pulled their data from nine crypto wallet and custody providers, bringing the total to 35 crypto-facing businesses. There was also a stated increase in the number of listed assets.
According to the financial intelligence arm, cryptocurrency listings increased from 1,362 in 2022 to 1,399 in the first months of this year.
Further insights emerged from their findings. KOFIU reported that the average daily trading volume from January to June 2023 was approximately 2.9 trillion won (about $2.19 billion).
This represents a 1.3% decrease from 2.94 trillion won (about $2.21 billion) in the final quarter of 2022.
Moreover, cryptocurrency investors fell from 6.27 million in 2022 to 6.06 million traders in 2023. This drop represents a 3% decline in investor participation in the decentralized economy.
Crypto Firms Facing Tough Times
2022 was a trying period for crypto-facing businesses after a meteoric rise in 2021. The nascent industry got hit with major macroeconomic events and industry-related issues.
The first was the Terra blockchain collapse, which wiped off over half a trillion dollars from the $2.92 trillion strong market.
Rounding the year with even more unpleasantness, the FTX exchange crumbled, and its founder and CEO, Sam Bankman-Fried, was charged with fraud-related crimes by the US authorities.
These issues have dampened confidence in the crypto market, and trading firms have been negatively impacted.
According to KOFIU, about 10 surveyed crypto trading firms struggled to maintain operations due to a sharp decline in volumes traded and transaction fees earned.
The strong crypto winter also saw crypto fundraises drop to $2.1 billion a quarter for most cryptocurrency exchanges.
Nonetheless, a sliver of hope remains as the total operating profit shot up by 82% from its 2022 close.
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