Key Takeaways:
Daily trading volumes on Upbit – South Korea’s leading cryptocurrency exchange – have witnessed a significant decline after tumbling down 75% from this year’s high of $15 billion to nearly $4 billion yesterday.
Experts suggest this may be a sign that the trend of frenzied trading of alternative cryptocurrencies (altcoins) has slowed down and those assets may find it harder to maintain higher values compared to market leaders Bitcoin (BTC) and Ethereum (ETH).
Trading Volume On South Korea’s Largest Crypto Exchange Down 75% In Under a Month
According to data from CoinGecko, Upbit registered just $3.79 billion in trading volume in the past 24 hours. This is considering the exchange lists 192 different cryptocurrencies and offers 309 trading pairs for users to choose from.
This also comes weeks after trading volumes skyrocketed on March 5th to $15 billion. TradingView data showed that the total market capitalization of altcoins surged to a two-year high of $788 billion on that day.
However, the altcoin market cap has since steadied to about $750 billion. The dramatic decline coincides with a broader cooling-off period for cryptocurrencies other than Bitcoin and Ether.
Experts Say Trading Volumes Spiked Due to Ethereum’s Dencun Upgrade and Bitcoin’s ATH
Crypto exchange Matrixport said in a Telegram broadcast that crypto trading volumes skyrocketed early last month in anticipation of Ethereum’s Dencun upgrade, which promised to reduce transaction costs on the leading decentralized finance (DeFi) blockchain, added with some political developments that brought crypto to the forefront.
The channel also highlighted that the declining trading volumes bring into question the sustainability of the altcoin rally.
In the two weeks leading up to March 5th, Bitcoin’s record moves to all-time highs above $70,000, and Ethereum’s Dencun hard fork resulted in investors taking risks in other cryptocurrencies, including meme coins, which led to daily trading volumes on Upbit skyrocketing from just $2 billion to a whopping $15 billion.
Such was the demand for altcoins that at one point, South Korean crypto exchanges surpassed the trading activity of the country’s stock market. Crypto investors in the Asian country are far more interested in altcoins than BTC and ETH, two of the largest cryptocurrencies by market capitalization.
South Korean Crypto Investors Pick Altcoins Over Bitcoin and Ether
As per a study conducted by DeSpread Research in October, Upbit users are particularly interested in maximizing their profits through altcoins and are more likely to accept the high risks associated with these crypto assets. Interestingly enough, trading activity in Bitcoin and Ether on the exchange only accounts for a smaller portion of its total volume.
Nasdaq-listed exchange Coinbase, regarded as one of the largest in the world by trading volume, carries out most of its trading activity in BTC and ETH.
Bitcoin-Korean won and Ether-Korean won pairs makeup just over 9% of Upbit’s current daily trading volume close to $4 billion, with the remaining coming from trades in altcoin-fiat pairs.
However, some analysts believe that this decline signifies a maturing cryptocurrency market because as the market stabilizes, investors tend to gravitate toward the more established assets like Bitcoin and Ethereum. The consolidation is seen as a positive sign as it could weed out the overly speculative altcoins and foster long-term growth within the market.
