Bitcoin fall drags down local crypto exchange stocks

An electronic board set up at a Bithumb customer center in Seoul, shows the steep price fall of Bitcoin, Wednesday. Yonhap

By Lee Min-hyung

The ongoing crash of major cryptocurrencies is dragging down crypto-related stocks here, with most companies that invested in exchanges extending losses in line with escalating fear sentiment in the global crypto market.

Kakao was hit hardest by growing skepticism in the crypto industry. Shares of the nation's dominant mobile platform operator have continued a losing streak for the past few months. Kakao's stock price was traded at as high as around 170,000 won last year, but it has fallen sharply to as low as 72,800 won at one time on Wednesday.

The company is the third-largest shareholder of Dunamu, the operator of Korea's largest crypto exchange, Upbit. Kakao holds a 10.88-percent stake in Dunamu.

Woori Technology Investment is one of Dunamu's major shareholders with a stake of 7.4 percent in the exchange operator. But shares of the Woori affiliate are also extending losses. The firm's stock reached a new high of 12,000 won late last year but has since plunged to below the 6,000-won mark.

Vidente, the largest shareholder of Bithumb, the second-largest exchange operator here, also remained weak in its stock performance. The company holds a 34.22-percent stake in Bithumb Holdings, as of the end of last year. Vidente shares showed a steep downward trajectory since April.

But of particular concern is that the crypto exchange investors' huge stock fall is forecast to continue at a time when the U.S. Fed and the Bank of Korea are discussing making additional rate hikes.

These discussions have heightened the business uncertainties of major overseas exchanges as well. Coinbase Global, the top crypto exchange based in the U.S., said Tuesday that it would slash its workforce by 18 percent, or 1,100 workers, as part of its decision to brace for the upcoming crypto winter.

“I shared that I've made the difficult decision to reduce the size of our team at Coinbase by about 18 percent,” the firm's CEO Brian Armstrong said. “The broader market downturn means that we need to be more mindful of costs as we head into a potential recession.”

Other overseas-based crypto business operators ― such as Crypto.com and BlockFi ― have also recently made similar decisions with layoffs of hundreds of staff amid the freezing market sentiment.

However, Korea's crypto exchanges have said they have no immediate plans to downsize their workforce.

“For now, Dunamu does not have plans to cut its workforce, most of whom are developers,” a spokesperson at the Upbit operator said.