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Why has South Korea become one of the hottest markets in the world?
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In fact, the trading scope of Korean crypto investors is not limited to local platforms. In recent years, the trend of funds flowing to overseas exchanges has become increasingly obvious. According to the Korean FIU disclosed in November last year, in the first half of 2023, the total amount of crypto assets transferred from domestic exchanges in South Korea to overseas exchanges reached 52.3 trillion won, of which 203,000 users chose Binance or Coinbase. In addition to the large number of participants and large scale of funds, Korean investors also have a more aggressive risk appetite, and they prefer to invest in highly volatile altcoins. About 80% of the crypto assets traded on Upbit are tokens other than Bitcoin and Ethereum, making the Korean cryptocurrency market a speculative playground.
In recent years, among young office workers in South Korea, the term financial therapy has become popular, which refers to using money to heal a wounded heart, relieve depression or stress. It is not difficult to imagine that when a worker who has worked hard and is exhausted is feeling depressed, when a salary or bonus suddenly arrives, the joy that arises spontaneously will instantly dilute the stress, and even greatly reduce physical discomfort.
Having spent some time in South Korea, I can speak to this issue. To some extent, the widespread acceptance of financial therapy among South Korean M and Z generations shows that the idea of accumulating money as a primary goal is deeply rooted in the Korean economic system and the environment with little social security. This phenomenon is also confirmed by the World Values Survey, an international research project, in its last round in 2018. The agency found that 45% of South Koreans consider themselves materialists, which is significantly higher than Japan's 21.6%, France's 19.2% and the United States' 14.4%. According to a survey released by the Pew Research Center in November 2021, South Koreans put economic stability first, and the highest proportion of choosing "material happiness" as a source of meaning in life, followed by physical and mental health and family relationships, which is in sharp contrast to the other 14 countries surveyed, which listed "family and children" as the primary source of meaningful life. Based on this mentality, many Koreans tend to let money dominate even in the field of interpersonal communication. This strong desire for money has also led many South Koreans, especially the younger generation, to choose leveraged investment. According to statistics from the Financial Supervisory Service of South Korea, South Koreans' cumulative debt reached 476.9 trillion won in the year ending October 2024, of which nearly 28% was borrowed by individuals in their 20s and 30s.
In addition, Korean society is generally full of strong jealousy and comparison psychology, which can be seen from the proverb "My cousin buys land, and I have a stomachache". In this environment, people are more likely to envy and be jealous of those who have wealth. Especially when money is regarded as the most important criterion for measuring success, the desire for wealth among some Koreans has become stronger. The desire for wealth and finance also makes ordinary investors flock to so-called successful investors. Therefore, crypto KOLs have considerable influence in Korea. They post information through YouTube or Telegram communities to guide fans to buy a certain project or use their rebate links to register for a certain exchange. The top KOLs can receive millions of dollars in rebates every month. The well-known anchor Inbeom even launched his own meme coin BugsCoin. But KOLs are often accompanied by huge controversies of "cutting leeks", while Korean retail leeks are like weeds, growing again in the spring breeze, and they continue to move forward even after experiencing two major crises of Terra and FTX.
I think that in South Korea, where class and wealth are severely solidified, the opportunities for the younger generation to accumulate assets are generally limited. However, under the influence of the idea of money first, when the failure of traditional investment methods is intertwined with the lack of wealth growth channels, it has formed a driving force to promote the prosperity of the Korean crypto market to a certain extent.
