Assessing Bitcoin's Dominance in the KRW Market Amid Declining Upbit Volumes

The Korean won (KRW) market has long been a bellwether for global cryptocurrency trends, driven by its historically high retail participation and institutional innovation. However, 2025 has seen a dramatic recalibration of this dynamic, marked by a sharp decline in trading volumes on South Korea's largest exchange, Upbit, and a nuanced shift in liquidity dynamics between Bitcoin and altcoins. This analysis examines Bitcoin's resilience in the KRW market, the structural factors behind Upbit's volume contraction, and the implications for token-specific liquidity.

Bitcoin's Resilient Dominance in the KRW Market

Bitcoin's market dominance in the KRW ecosystem remains robust, holding approximately 59.2% to 59.5% of the total market capitalization as of November 2025. This figure underscores Bitcoin's entrenched position despite broader crypto market volatility. While Ethereum surged by 68.5% in Q3 2025, Bitcoin's 6% growth pales in comparison, reflecting a broader trend of capital shifting toward traditional equities in South Korea. The KOSPI index reached record highs during the same period, drawing retail investors away from crypto assets.

However, Bitcoin's dominance is not merely a function of market cap. Token-specific liquidity metrics reveal a stark contrast between Bitcoin and altcoins. On Upbit, Bitcoin's BTC/KRW pair accounts for 18.43% of the exchange's total trading volume, outpacing Ethereum (10.21%) and XRP (17.91%). This liquidity concentration is further amplified by Bitcoin's tighter bid-ask spreads, which average 0.01% on Upbit compared to wider spreads for altcoins. Such structural advantages position Bitcoin as the de facto benchmark for liquidity in the KRW market.

Upbit's Volume Decline: Structural and Seasonal Factors

Upbit's trading volumes have experienced a precipitous drop in 2025, with daily volumes plummeting to $1.78 billion in November 2025-a 80% decline from December 2024's $9 billion. This collapse is attributed to a confluence of factors: regulatory scrutiny, reduced retail participation, and macroeconomic headwinds. For instance, a KRW deposit and withdrawal suspension in September 2025 led to a 70% liquidity drop on the platform. Additionally, the broader "crypto winter" narrative has dampened user enthusiasm, with South Korean investors increasingly favoring equities over digital assets.

Seasonal patterns also play a role. Upbit's November spot trading volume reached $64 billion, but this figure collapsed by 60.6% in early December to $25.91 billion. Such volatility highlights the fragility of retail-driven markets and the outsized influence of regulatory and geopolitical events. For example, the "Martial Law Crisis" in December 2024 triggered a 30% drop in BTC-KRW pricing on Upbit, underscoring the exchange's vulnerability to localized shocks.

Liquidity Dynamics: Bitcoin vs. Altcoins

The liquidity gap between Bitcoin and altcoins on Upbit has widened significantly. While Bitcoin's order book depth remains stable, altcoins like XRP and Ethereum exhibit fragmented liquidity. For instance, XRP/KRW accounted for 19.13% of Upbit's 24-hour trading volume in November 2025, yet its bid-ask spreads are notably wider than Bitcoin's. This disparity is exacerbated by the fact that 71% of altcoin liquidity is concentrated on offshore exchanges, leaving platforms like Upbit with a diminished role in altcoin trading.

Structural shifts from 2023 to 2025 further illustrate this trend. In 2023, altcoins dominated 80% of Upbit's trading activity, driven by retail enthusiasm for small-cap tokens. By 2025, however, Bitcoin's share of liquidity has grown, particularly during periods of global instability. During the "Martial Law Crisis," Bitcoin's cumulative volume delta (CVD) surged while altcoins experienced net outflows. This shift reflects growing institutional confidence in Bitcoin as a stable asset, with its average 1% market depth on Korean platforms reaching $1.3 million in early 2025.

Implications for Investors

The interplay between Bitcoin's dominance and Upbit's liquidity challenges presents a nuanced outlook for investors. While Bitcoin's structural advantages-such as tighter spreads and deeper order books-position it as a safer haven in the KRW market, the broader crypto ecosystem faces headwinds. Altcoin liquidity remains highly speculative, with many tokens experiencing rapid but short-lived price surges post-listing.

For institutional investors, Bitcoin's resilience in the KRW market offers a compelling case for allocation, particularly as South Korea's regulatory environment evolves. However, retail investors must remain cautious about the risks of regulatory crackdowns and market sentiment shifts. The 80% decline in Upbit's volumes serves as a cautionary tale about the fragility of retail-driven markets.

Conclusion

Bitcoin's dominance in the KRW market is underpinned by its liquidity advantages and institutional adoption, even as Upbit's trading volumes contract. The structural shift from altcoins to Bitcoin reflects broader macroeconomic and regulatory trends, with South Korean investors increasingly prioritizing stability over speculative gains. For investors, the key takeaway is clear: Bitcoin remains the cornerstone of liquidity in the KRW market, but the broader crypto landscape requires careful navigation amid declining retail participation and regulatory uncertainty.