Revealing the secrets of South Korea’s crypto market: A 70-year-old aunt queues up to open an account, a big country for speculating on cryptocurrencies

Author: 0xFacai , BlockBeats

Recently, with the surge in "antique coins" such as XRP, the news of "Korean aunts rushing into the encryption market" has once again spread in the community. At the same time, the trading volume of XRP, APT and other related tokens on Korean trading platforms such as Upbit and Bithumb even exceeded Binance for a time. In other words, on these tokens, the trading volume of South Korea alone is comparable to the trading volume of the rest of the world combined.

The crypto community has long regarded Upbit's listing as a great benefit for the project. After a token is listed on these Korean exchanges, the price can often surge rapidly in a short period of time. This strong purchasing power has made the world curious about the "Kimchi Premium". How does the Korean cryptocurrency market actually work? What kind of hype logic do investors here have?

Rhythm conducted an interview with Andy, a member of Frax Finance who has been engaged in crypto construction and education in South Korea for many years, and deeply discussed the investment logic and real current situation of the Korean crypto market.

"Another stock market" for Koreans

BlockBeats: You have very strong development in the Korean market, such as large purchases and so on. How do people get into the cryptocurrency market and how do they choose a currency?

Andy: Frankly, this is still a mystery that everyone is trying to solve. One thing I am sure of is that DeFi is quite weak here because the trading platform is very convenient for deposits and withdrawals. I am a Canadian citizen and have lived in South Korea for 10 years. In my early years, I was able to trade on Upbit and Bithumb. I still remember that it only took me five minutes to complete all operations from opening a bank account and connecting to Upbit or Bithumb. Use Korean Won to trade and withdraw cash.

So in South Korea, it is very easy for people to enter the crypto market and invest, it is not difficult, although you have to open an account in a specific bank. Secondly, I think the act of trading cryptocurrency has a bit of a "glow of hope" among Korean investors, especially the young group of 20 to 30 years old.

And the media in South Korea are discussing this topic. You can see that people from their 20s to 60s and even 70s are participating in the encryption market. I don’t know if you have heard that Bithumb’s office building was once crowded with people aged 50 to 70 trying to open accounts, especially when a new bull market started.

BlockBeats: Is this what happened in the last bull market or this one?

Andy: It's this bull market, just in the last week or two, that's been in the news.

Retirees aged between 50 and 70 are queuing up to open accounts, and the queue has even reached more than 3,000 people. It’s really crazy. Mainstream media and social networks are also talking about the cryptocurrency secondary market, and while mainstream media tends to portray it as dangerous, more and more people are paying attention as Bitcoin hits all-time highs.

According to media reports, a nearly 60-year-old housewife said while queuing up to open an account: "It feels like a waste to store retirement funds in a bank account, so I tried investing in Bitcoin and Dogecoin"; the source of the picture is from the Internet

Going back to the young people, I think a lot of young people in their early 20s see this as a lottery-like opportunity. I don't want to say gambling, but they do see cryptocurrencies as a way to make money quickly because the media coverage they are exposed to is more about some people making a lot of money through cryptocurrencies than those about losing money. Attractive. Many people in their 30s will be a little more strategic and try to understand what the project behind the token is, but even so, many friends around me will still buy the token first, and then go into the community to ask what the project is. So in fact, most people don’t know the real situation of the project.

This mentality may be due to strong FOMO. This mentality is also very common in Korean culture, where the culture of following the trend is very extreme. Whether it is entertainment or investment, many people feel that if they do not participate, they will fall behind the trend, or even feel disconnected from the entire culture. So if you don’t know what you’re investing in, it might be because you’re afraid of missing out, or a friend suggested you get involved.

And I lived in Canada, where everything was relatively more relaxed, and I never felt the pressure to chase. But after coming to South Korea, I felt that the fast-paced life is prevalent in society. For example, you have to graduate at a certain age, serve in the military, get married, find a job, and make investments. So when everyone around you is using Upbit or Bithumb to trade cryptocurrencies, you feel like you can’t fall behind. I think many people are driven by FOMO, the fear of falling behind others in investing, especially when they see friends starting to make money.

BlockBeats: In the past few years, has DYOR culture (Do Your Own Research) developed in the Korean encryption market?

Andy: I ​​have been working in the encryption field for seven years and have been living in South Korea. I have indeed seen more and more education and research platforms emerging, and many offline activities and Web2 projects have also participated in it, really starting to help people understand and learn. Cryptocurrency. More and more investors are indeed doing their own research before buying tokens. Many KOLs are also discussing different areas of cryptocurrency, including NFTs and other projects, and teaching everyone how to transfer funds from centralized trading platforms. Transfer it out and use it for airdrops or staking.

However, the main reason why the huge trading volume of the Korean trading platform is often comparable to that of Binance is because most of the funds remain within the trading platform. For example, when I tell others that there is a pool with an annualized return of 100%, as long as the tokens are transferred from the platform to a wallet such as MetaMask, and then transferred to another public chain for staking, many people will give up trying because the process is very complicated. , I think this is where we need to improve greatly in education. Compared to the United States and other places, South Korea is far from adequate in terms of DeFi and wallet usage.

Here, most traders only trade on the platform, and the funds do not leave the centralized trading platform and enter their personal wallets. Of course, younger groups, such as those aged 20 to 30, do do some research on their own and are willing to try these projects, but compared to the overall number of market participants, this group is still relatively small.

BlockBeats: So in South Korea, can we consider the crypto market as a market as big as, or at least comparable to, the stock market?

Andy: I ​​think this comparison is reasonable. I think that at least in terms of media attention, cryptocurrency does occupy a large proportion. Everyone talks about cryptocurrencies about as much as the stock market. But the difference is that cryptocurrency is not regarded as the best choice, and its image is not so glamorous compared to the stock market.

If the stock market falls, media reports may be that "the government's policies are not effective" or "South Korea's financial and economic situation is not good." But if Bitcoin suddenly drops 40%, the media will usually say "Look, this happened again, this is why cryptocurrency is so dangerous, it ruined a lot of people's lives", so the public opinion atmosphere between the two is different. .

But we actually know that cryptocurrencies are relatively safe as long as you do enough research. Although it's more volatile than the stock market, it's not as dangerous as you think if you know what you're doing. If I knew nothing about a coin and I just followed the trend and bought a meme coin, and then it suddenly dropped 80%, then obviously I would think it was a scam. But if I know what I'm investing in upfront and don't do my homework, losses are expected and that's the difference.

BlockBeats: In your opinion, how much impact does negative media coverage have on Korean crypto investors?

Andy: This is a very interesting thing. Many media have been promoting the dangers of cryptocurrency and urging people not to participate, but in fact, this may have attracted more people to try it. Because a lot of people are just following the trend, not because they really understand cryptocurrency.

South Korea is a country that pays great attention to trends. Whether it is music, fashion or other fields, everyone is always chasing the latest trends. The same is true for cryptocurrency. "Everyone is investing in cryptocurrency trading, so I have to participate too.", " Everyone is talking about Bitcoin, so I have to join in.” When I get in a cab and the driver starts asking, "Have you heard of Bitcoin?" that's usually my signal to sell some tokens.

But during a bear market, the general public no longer discusses Bitcoin, but the market's trading volume is still large. If you look at people who are really focused on the crypto market and do their own research, they are actually very smart and follow market trends, and sometimes they even get information faster than me, especially about some new projects. In South Korea, there are some “crypto fanatics” who are very smart and well aware of all the latest developments in the crypto market.

The logic of currency speculation among Korean retail investors: why are

APT and XRP the most popular?

BlockBeats: Is meme currency a popular track in the Korean market?

Andy: From my personal experience, they don’t trade meme coins very often. This is not difficult to understand. If you think about it, you will find that these coins are basically not on the listing list of centralized trading platforms, and people usually use Korean won to trade existing tokens on the platform. Mooden was recently listed on Bithumb, and I thought this might bring about some changes.

However, Dogecoin is still quite popular in South Korea, but I bet many people may not know that Dogecoin actually has no supply cap. Recently, people just think that Dogecoin is equal to Musk, and Musk has a good relationship with Trump now, and the latter is about to become president, so he is very bullish on Dogecoin.

But in general, once the price of a token starts to surge in South Korea, it leads to a huge influx of money, pushing the price up even more, as people sell other assets and move into Dogecoin or other things that are going strong. of tokens. This is another manifestation of the FOMO effect. I even think that many people trade Solana in South Korea, but they do not use SOL to buy meme coins in the on-chain ecosystem.

BlockBeats: Why buy Solana if it’s not to participate in the ecosystem? What other popular targets are there in South Korea?

Andy: I ​​think this is mainly because Solana is a globally popular token. You will see many globally popular tokens like Solana, and Koreans like to buy them. But you will also see that some tokens that are not very popular or have not been heard of in other regions still have a large trading volume in South Korea, such as Aptos. Its token APT has the largest trading volume in the world in South Korea. the highest.

In the Korean crypto market, there are some special phenomena. For example, many people buy tokens such as SEI and SUI simply because they sound like girls’ names. There is also a saying that “buying SEI and SUI will help you find a beautiful girlfriend.” ” Internet culture meme. A similar situation exists with APT, which means "apartment", so people will say, "If you buy APT, you can buy an apartment, and if you buy ONDO, you can buy an apartment-style house." Internet memes like this actually have a great impact on the market, so we can see that some tokens that are not well-known outside of South Korea have huge trading volumes here, just because many people don’t know much about them but still follow the trend and buy them. This is actually Very crazy.

BlockBeats: Is Roise’s recent popular song “APT” also a factor?

Andy: Aptos was already popular even before this. In fact, this is a case that I studied to see what the Aptos team did right and how projects like IQ or Frax can enter the Korean market and successfully occupy a place like Ondo or Aptos. I think that's why the founder of Aptos comes to Korea so often. I see him all the time and I'm not surprised anymore, so the way the Korean market works is really weird.

But what is certain is that, first, a lot of transactions occur on centralized trading platforms; second, people have not done a lot of in-depth research. I think it can be summed up like this: meme currency traders in other parts of the world trade meme coins, but in Korea, people don't trade meme coins, but they trade other cryptocurrencies in the same way as meme coins.

BlockBeats: The price of XRP skyrocketed some time ago, and its trading volume on Upbit even exceeded Binance for a time. Why is XRP so popular in South Korea as well?

Andy: XRP has actually been popular in South Korea for five, six or seven years. I remember the first cryptocurrency I bought was XRP. At that time, I didn’t know what I was buying. I hadn’t entered the industry yet, I was just a college student. At that time, it was because my relatives said to me: "Buy this coin called XRP, it will rise to 10 US dollars," so I bought some. Then the SEC lawsuit happened, but even so, its popularity in South Korea did not diminish.

This is a bit like EOS. Few people may talk about it now, but there is still an active EOS community in South Korea, and occasionally the price can rise sharply due to South Korea's promotion. As for why EOS is so popular, I can’t say.

And the reason why Ripple is popular, I think, is because people believe it is the "next big thing." Especially when it fights the government and wins, this narrative becomes particularly strong, especially in the United States. I don’t have a definite answer, but I know for sure that Ripple is really hot in South Korea. Especially after the news broke that they beat the SEC, the heat is back on it.

So I think that if a token wants to be popular in South Korea, it must first gain some recognition on a global scale, and then it can enter the Korean market. But this is not the case for every token. Aptos seems to have emerged first in South Korea.

But I also know that most traders, including myself, are not deeply involved in the XRP ecosystem. I don't know much about their technology and specific progress. And a lot of people are learning that they're going to launch their own stablecoins, and I think that's also a factor that might drive the market. In South Korea, due to the impact of the Terra/Luna incident, the image of stablecoins is not particularly good.

BlockBeats: Did the Luna incident have a great impact on South Korea? Many institutions have invested a lot of money.

Andy: Yeah, it's pretty bad. I remember there were many news reports at that time saying that someone committed suicide because of this matter, which was really tragic. I also know that some large Korean venture capital companies invested a lot of money, but suffered huge losses as a result, and many institutions were hit hard. Therefore, except for stablecoins such as USDT and USDC, the narrative of stablecoins is still not very good in South Korea.

BlockBeats: Another interesting phenomenon is the high premium on Korean trading platforms. Are Korean investors aware of this, or what is their attitude?

Andy: Yes, they definitely know about the "pickle premium." In the early years, some people used credit cards to buy on one platform and then sell on another platform, easily earning 10% profit. However, this system has been disabled now, but they must be aware of this phenomenon.

For example, when martial law was announced a while ago, Bitcoin plummeted 40% in 10 minutes on Upbit and Bithumb. I'm sure many people tried to buy on the dip and then sell on Binance or wait for it to recover, but based on my conversations with some people, this arbitrage strategy was very difficult to operate at the time because both Upbit and Bitdump were frozen and could not Make deposits and withdrawals.

I even heard that due to the current unstable situation of the Korean government, some people will place orders in advance so that once the market experiences an extreme drop again, they will be automatically executed and receive ultra-low-price chips.

On December 3, affected by the promulgation of martial law, BTC once experienced a serious negative premium of 40% on Upbit, Bithumb and other Korean trading platforms; picture source comes from the Internet

BlockBeats: South Korea’s cryptocurrency tax policy seems to have been delayed. Does anyone care about this?

Andy: They care about this very much, and every time when it comes to a critical moment, politicians running for election will make it part of their campaign platform to postpone taxes or delve into related policies. South Korea has already experienced three tax deferrals here, each time for two years, and now it's two years again. But as far as I know, the new president is not that optimistic about cryptocurrencies after taking office, which worries some people. But in any case, the issue of cryptocurrency taxation is a topic of great concern to people, and everyone is very concerned about it.