South Korea crypto holdings halve as investors shift to stocks

South Korea's retail crypto exposure has fallen sharply over the past year, according to data submitted by the Bank of Korea to lawmakers: aggregate balances held at the country's five major exchanges measured about 60.6 trillion won at the end of February.

That figure represents a drop from a peak near 121.8 trillion won recorded in January of the prior year, reflecting both price declines in major cryptocurrencies and net outflows from domestic exchange accounts. The Bank of Korea's submission also shows day-average trading volumes and exchange deposit balances declined after late-2024 peaks.

Market participants attribute much of the outflow to a resurgent South Korean equity market, where gains—particularly in memory-chip and other large-cap exporters—have drawn retail capital back into stocks. Reuters coverage of Korea's market rally and foreign buying underlines how equities have become a more attractive vehicle for domestic investors compared with the volatile crypto sector.

At the same time, holdings and trading in dollar-pegged stablecoins rose markedly: Bank of Korea-related data indicate three major dollar-denominated stablecoins accounted for roughly 56.9 trillion won of trading in Q1, and exchange-held stablecoin balances expanded to about 607.1 billion won by February. Analysts interpret this as a dollar-hedging and liquidity management move amid won weakness and equity market rotations.

Looking ahead, analysts say continued strength in the domestic stock market could keep pressure on local crypto holdings, but global crypto price recovery or policy changes—such as clearer rules for corporate crypto holdings—could prompt renewed inflows. Observers also warn that stablecoin flows and cross-border activity will remain important determinants of domestic crypto market liquidity.