The latest Financial Stability Report from the Bank of Korea (BOK) shows that South Korean retail investors are shifting from aggressive buying to strategic profit-taking, raising questions about the impact on global market trends.
This means that, even though Bitcoin has surpassed $100,000 this year, South Korean investors are choosing to take profits instead of holding on.
South Korea's overextensive trading activity shows signs of cooling down.
South Korea has long been a major influence on the global cryptocurrency market. Despite its relatively small population, trading pairs in Korean won (KRW) consistently rank among the top two most volume currencies in the world, often matching or surpassing the US dollar at peak times.
However, the new BOK report points to a clear shift in investor behavior. While the crypto market turnover rate in South Korea remains high at 156.8%—far exceeding the global Medium of 111.6%—the nature of activity is different. Instead of continuously buying aggressively when prices rise, retail investors in South Korea are now primarily choosing to take profits during the 2025 price surge.
"The high turnover rate of the domestic cryptocurrency market is due to the fact that the majority of participants are small-scale investors, who tend to trade short-term to realize profits," the Central Bank commented.
Concentration risk and concerns about market structure.
The report also revealed a highly concentrated market: the top 10% of investors accounted for 91.2% of total volume between 2024 and June 2025, according to data from the Financial Supervisory Commission. This raises concerns that a small number of people could manipulate prices.
South Korea's unique legal environment—where foreign companies and investors are prohibited from trading on the domestic exchange—leaves the market almost entirely dominated by retail investors. The lack of professional market makers leads to tight liquidation , exemplified by Tether fivefold price surge on Bithumb during the October crash .
Global spillover effect
Whenever South Korean investors reduce their trading activity, the global market is shaken. Historical data shows that during the major bull runs of 2017 and 2021, exchanges like Upbit and Bithumb often led the world in trading volume. The Kimchi Premium phenomenon—where crypto prices in South Korea are higher than international prices—also became an indicator of the "excitement" among retail investors.
This shift to profit-taking could be the reason why the 2025 rally is more cautious than previous cycles. With South Korean retail investors no longer a major buying driver, global Order Book are also losing strong buying power during crucial accumulation phases.
This isn't an isolated change. A previous BOK report explained the sluggish crypto market was due to a strong surge in domestic stocks. The KOSPI index has risen over 70% year-to-date, becoming the best-performing major index globally, thanks to AI-related stocks like Samsung Electronics and SK Hynix.
Daily volume on major South Korean crypto exchanges has plummeted by more than 80% from its 2024 peak, as investors shifted Capital to US stocks and leveraged ETFs. “Where are all the retail crypto investors in South Korea now? The answer: they’ve moved to the neighboring stock exchange,” commented AB Kuai Dong, an expert.
Different Paths: South Korea vs. Acceptance by Global Organizations
Compared to global trends, South Korea is going in the opposite direction. While the Korean market remains largely a playground for retail investors, the international market has shifted towards strong institutionalization since the SEC approved a spot Bitcoin ETF in January 2024. These products have attracted net inflows of over $54 billion, with BlackRock's IBIT alone attracting over $50 billion in assets under management.
The Bank of Korea (BOK) also acknowledged this divergence, noting that the global crypto market is increasingly intertwined with the stock market—especially during periods of macroeconomic difficulty or changes in monetary policy. The correlation between Bitcoin and the S&P 500 has increased sharply since 2020, thanks to institutional participation, acceptance by corporate funds, and the popularity of ETFs.
Meanwhile, the South Korean market remains "isolated" from this trend. The central bank attributes this to the high concentration of small retail investors, weak liquidation , and policies restricting Capital flows, which limit arbitrage opportunities.
What happens next: Organizational involvement is imminent.
The report indicates that the differences in the South Korean market will gradually disappear as legal reforms progress. The government has allowed non-profit organizations to sell crypto assets since June 2024 and is currently also testing allowing professional investors to trade. Simultaneously, the government is also discussing the approval of a spot Bitcoin ETF.
The Bank of Korea (BOK) predicts that allowing foreign financial institutions and investors to participate would help the market establish a proper "market maker" mechanism and mitigate liquidation issues. The participation of institutional investors would also help reduce volatility in volume, as well as lower the turnover rate in the long term.
However, the central bank also warned of some risks. “As foreign businesses and investors with stronger Capital and better information enter the market, crypto prices in South Korea will be more sensitive to supply and demand fluctuations,” the report noted, while emphasizing the need for close monitoring during the transition period.
Final conclusion
The South Korean crypto market is at a major turning point. The shift from aggressive buying to profit-taking reflects increasingly sophisticated investors, but it also means the world is losing a crucial source of stimulus. As new institutions and policies develop, South Korea's influence on the global crypto market will gradually shift from small-scale, high- volume to larger, longer-term Capital flows.
At present, the cycle of South Korean retail investors single-handedly disrupting the market appears to have ended—a shift that could alter how the market reacts in future cycles.
