Upbit and Bithumb Trading Volumes Plunge Over 40% as Crypto Market Cools
What happened
South Korea's two biggest cryptocurrency exchanges, Upbit and Bithumb, have experienced a significant drop in trading activity, with daily average volumes plummeting over 40%. This downturn, highlighted in an Electronic Times Internet report, signals a cooling of the South Korean crypto market and raises questions about the profitability of major exchanges in a more subdued environment.
The numbers paint a clear picture of this contraction. As of May 20, Upbit's daily average trading volume in the first quarter of 2026 stood at approximately USD $1.55 billion. This figure represents a 38.8% decrease from the USD $2.53 billion daily average recorded in the second half of 2025. Bithumb saw an even more pronounced reduction, with its daily average volume falling by 44% to roughly USD $647.31 million over the identical period. When viewed from January 1 to May 20, the trend became more stark, with Upbit's daily average volume declining 45.5% compared to the H2 2025 baseline, and Bithumb's dropping 48.5% to approximately USD $599.77 million per day.
This decline is considered part of a broader market cooldown, following a period of heightened activity in late 2025. Industry observers point to several contributing factors, including a reduction in retail speculation, ongoing regulatory uncertainty within South Korea's crypto policy landscape, and a general shift towards a more risk-averse sentiment among traders. The absence of significant bullish catalysts in early 2026 has further contributed to lower participation and reduced trade volumes.
Why it matters for Australian investors
The South Korean market has historically been a bellwether for global crypto trends, often exhibiting strong retail participation and, at times, premium prices for digital assets. A sustained volume drop of this magnitude, particularly in a market as active as South Korea's, could indicate a structural shift in trader behaviour rather than merely a temporary lull. For Australian investors, this offers a useful if indirect data point on broader market sentiment.
While Australian exchanges like CoinSpot, Independent Reserve, Swyftx, and BTC Markets operate under different regulatory frameworks and market dynamics, a significant global market cooldown can influence sentiment locally. Reduced speculation overseas might temper the enthusiasm of some Australian retail investors, or potentially signal a period of consolidation. Monitoring these international trends can provide local investors with context for their own investment decisions, without constituting financial advice.
Trading volume directly impacts the liquidity and depth of crypto markets. A market with high trading volume typically offers tighter spreads and easier execution of large orders, which benefits all participants. Conversely, declining volumes can lead to less liquid markets. Australian investors evaluating their portfolios or considering new positions might find it prudent to observe global liquidity trends, as they can indirectly affect pricing and market efficiency even on local Australian dollar (AUD) denominated platforms.
Furthermore, the profitability of centralised exchanges relies heavily on transaction fees derived from trading volume. As volumes fall, exchanges, like any business, face pressure on their operating margins. For Australian investors, understanding the health of major global exchanges can provide insights into the resilience and sustainability of the broader crypto ecosystem. While Australian exchanges are robust and comply with AUSTRAC regulations for anti-money laundering and counter-terrorism financing, a global trend of declining exchange profitability can still transmit through investor confidence.
Impact on the AUD market
While the direct impact on AUD-denominated crypto markets might not be immediate or severe, a pervasive global market cooldown tends to influence broader investor sentiment. If the global trend of reduced retail speculation continues, it could flow through to a more cautious approach among Australian crypto holders. This might translate into less aggressive buying or selling activity on local exchanges where crypto assets are traded against the Australian dollar.
Local exchanges like CoinSpot and Swyftx cater specifically to the Australian market, offering AUD trading pairs and complying with Australian regulations. The health of these platforms is crucial for the accessibility and stability of the crypto market in Australia. While they are distinct from Upbit and Bithumb, a significant global market downturn impacting exchange profitability generally is a trend worth noting for market participants worldwide. The Australian Securities and Investments Commission (ASIC) continues to monitor the digital asset space, and global shifts in trading volume could indirectly inform their regulatory considerations.
Another consideration is the potential for arbitrage opportunities, or their absence. In periods of high volatility and disparate global market activity, price differences for cryptocurrencies between different geographical regions can sometimes emerge. South Korea, for instance, has historically seen a 'Kimchi Premium'. If such premiums or discounts become less pronounced due to overall market cooling and reduced speculation, it may affect the trading strategies of sophisticated Australian investors who monitor global pricing discrepancies.
For tax purposes, Australian investors must record all crypto transactions and declare them to the ATO, regardless of market conditions. While declining volumes don't alter these obligations, a quieter market might mean fewer taxable events for some. However, any capital gains from selling crypto, even in a subdued market, are still subject to Australian tax laws, just as capital losses can be used to offset future gains.
What to watch next
Investors and industry participants will be closely monitoring for signs of stabilisation in the coming months. A key factor to watch will be whether regulatory clarity emerges in South Korea and other major jurisdictions. Clear and consistent regulatory frameworks often foster greater institutional and retail investor confidence, potentially stimulating renewed activity. Any policy developments from bodies like AUSTRAC or ASIC in Australia, while specific to our local market, would also shape the landscape here.
Beyond regulations, the emergence of significant bullish catalysts could re-energise the market. This could include major technological advancements within blockchain ecosystems, new use cases for decentralised finance (DeFi), or broader macroeconomic improvements that encourage risk-on sentiment. Without such catalysts, the market may continue to experience tempered growth, making transaction fees a harder revenue source for exchanges.
We should also observe the performance of other major global exchanges, not just those in South Korea. If similar volume declines are reported across multiple regions, it would underscore a more widespread market shift rather than an isolated incident. This includes looking at data relevant to Australian exchanges, such as their reported growth in user base and trading volumes, which provide local context.
Finally, the cyclical nature of crypto markets means periods of cooldown often follow periods of intense growth. Understanding whether this current downturn is a typical market correction or indicative of a more fundamental, prolonged shift in investor behaviour will be crucial. Australian investors are always encouraged to conduct their own research and consider their individual financial circumstances when navigating these dynamic markets.
Coins covered
Common questions
How might a global crypto market cooldown affect my AUD crypto investments?
A global cooldown could lead to reduced overall market liquidity and potentially temper speculative enthusiasm in the Australian market. While not directly impacting AUD pricing in the same way, weaker global sentiment can contribute to a more cautious approach among Australian investors who use platforms like CoinSpot or Swyftx, potentially affecting capital flows into AUD-denominated crypto assets.
Are Australian crypto exchanges like Independent Reserve or BTC Markets impacted by these South Korean volume drops?
While Australian exchanges operate independently under AUSTRAC regulations and cater to the local AUD market, a significant global downturn in trading volume can indirectly influence them. Reduced global liquidity or a widespread shift in investor sentiment might lead to less trading activity generally, affecting revenue potential for all exchanges, including those in Australia.
Does the ATO have specific rules for crypto investments during market downturns?
The ATO's tax treatment of cryptocurrency in Australia remains consistent regardless of market conditions. Any disposal of crypto, including selling, swapping, or using it to pay for goods/services, is a capital gains tax event. If you sell crypto for less than its cost base, you may incur a capital loss, which can be used to offset future capital gains. Accurate record-keeping is crucial for tax purposes, irrespective of whether the market is booming or cooling.
South Korean crypto exchanges Upbit and Bithumb see trading volumes plunge over 40%. Discover what this means for Australian investors and the AUD market.