$24B Crypto Wipeout in Korea: The 6-Month Market Meltdown Explained

South Korea's crypto market just bled $24 billion in value—vanishing faster than a trader's confidence during a bear market.

What triggered the massive capital flight?

Regulatory crackdowns slammed the brakes on trading volumes. The Financial Services Commission tightened leverage limits while auditing major exchanges. Local investors scrambled to move assets offshore—or cash out entirely.

Market psychology flipped from FOMO to pure panic. Retail holders dumped altcoins first, then blue-chips. Trading floors turned into ghost towns as volume evaporated.

Global contagion didn't help. Bitcoin's correction amplified losses across Korean portfolios. The Kimchi Premium—that famous price gap—narrowed to almost nothing.

But here's the twist: smart money's already circling. Institutional players see blood in the water—and discounted entry points. Korean crypto always bounces back harder after a purge. Just ask anyone who survived the 2021 Luna crash.

Sometimes markets need to burn before they rise from the ashes. Traditional finance could learn a thing or two about resilience—if they weren't too busy counting their 0.5% annual yields.

Steep Drop in Trading Volume

The central bank also noted that the price volatility of major crypto assets, including Bitcoin, has recently decreased.

In its Financial Stability Report published on Friday, the BOK stated, “despite the recent rise in Bitcoin’s price, the total value of domestic investors’ VIRTUAL asset holdings has significantly decreased from its peak at the beginning of the year.”

According to the report, holdings dropped from a high of ₩121.8 trillion ($89.2 billion) in January 2025 to ₩89.2 trillion ($65.4 billion) in June. Deposits also saw a sharp decline of about 42%, from ₩10.7 trillion to ₩6.2 trillion.

Global Stablecoin Cap Rises, So Why Is It Falling in Korea?

The average daily trading volume in June was just ₩3.2 trillion, a steep drop from ₩17.1 trillion in December 2024—a decrease of nearly 80%.

The BOK attributes the domestic crypto slowdown to a booming local stock market. As Bitcoin’s price hit a new all-time high, South Korean stock prices also surged, causing capital to FLOW away from crypto and into the local equities market.

This trend is a troubling sign, especially in South Korea, a country with a high rate of spot crypto holdings and purchases globally.

In addition, stablecoin trading volume, which had been consistently outpacing Bitcoin’s for the past year, has shown a noticeable growth slowdown since March. This trend stands in stark contrast to the global market.

The BOK report explains that while the total global crypto market cap has continued to grow, the price volatility of major crypto assets has decreased. The BOK’s analysis suggests that enacting the US stablecoin law, the GENIUS Act, has led to a significant increase in the global stablecoin market cap, contributing to this trend.