Lukewarm crypto sentiment to pull down exchanges' earnings in 2023

The Korea Times

The Korea Times

Finance

Wed, November 29, 2023 | 12:09

Cryptocurrency

Lukewarm crypto sentiment to pull down exchanges' earnings in 2023

Posted : 2023-09-05 08:32

Updated : 2023-09-06 11:30

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By Lee Min-hyung

Korea's major crypto exchanges appear likely to continue reporting lukewarm earnings even in the latter half of this year, as fewer investors appear to be betting on an a market recovery occurring anytime soon.

According to Upbit and Bithumb, two major exchanges in Korea, their sales and operating profit in the first half displayed double-digit declines from a year earlier. The two firms combined account for more than 95 percent of the market share here. Three other firms ― Coinone, Korbit and GOPAX ― often categorized as the nation's top five exchanges along with Upbit and Bithumb, also reported losses during the same period.

The exchanges are not expected to achieve meaningful earnings rebounds in the latter half, as only some large-cap cryptocurrencies ― including Bitcoin and Ethereum ― are the focus of investors' attention, while most other alternative coins show few signs of a rebound.

Data from CoinMarketCap showed Bitcoin was traded at around $26,000 as of 3:50 p.m. Monday. This is an increase of more than 50 percent from the beginning of this year. Ethereum also showed a similar curve in its valuation.

Despite the rapid recovery of major coins, investors remain cautious and less optimistic over a near-term recovery of overall market sentiment, as was shown by the steep earnings falls of exchanges.

Industry sources said that it will take more time for the cryptocurrency market to revive itself at a time when other traditional asset markets, such as stocks and real estate, have not entered a path of stable recovery.

"We cannot find any clear signs that will help attract investors to the crypto market," a source said. "The industry has been faced with multiple risk factors in the first half, sparked by sequential collapses of U.S. banks and the bankruptcy of the once-renowned FTX exchange."

Even if macroeconomic uncertainties are alleviated sometime around the end of this year, it will be hard to predict a fast recovery of the market, given lingering negative sentiment among investors that can be tracked by real-time crypto trading volume, the source said.

mhlee@koreatimes.co.kr