According to Kaiko, more than 110 billion won has leaked from South Korean crypto platforms to offshore exchanges, depleting the domestic order book and causing market depth to reach new lows.
Korean exchanges still process a huge number of trades, but their design reportedly crowds out flexibility as the market structure has evolved little, although retail activity remains strong. Korean traders have been plagued by large price increments, slowing down executions and making accurate trades nearly impossible.
And yes, UPbit still leads the pack, but superiority doesn't mean immunity. The outflow proves that deepening liquidity does not equate to increasing liquidity when execution costs are rising.
Large ticks limit order books and slow trading on local exchanges in South Korea
The KRW market on exchanges like UPbit and Bithumb has always operated with large tick sizes. reason? Stability. Increasing the scale will remove noise and suppress sudden shaking. This keeps the order book clean, especially for the domestic retail trader population. But that stability comes at a price, and South Korea is feeling it now.
Each exchange determines the size of the tick, which controls how closely the price changes. Depth can appear strong on Korean platforms because orders are clustered at the same level, but this also means that spreads are wider, so traders end up paying more just to enter or exit.
UPbit divides the market into three parts: KRW, BTC, and USDT. The KRW market includes pairs such as XRP/KRW.
According to Kaitaka, UPbit accounted for about 70% of the total domestic trading volume through 2025, Bithumb was in second place, and Coinone and Korbit were incomparable.
Trading volumes spike significantly when global shocks occur, such as Donald Trump's re-election or the Oct. 10 stock market crash.
By the end of 2025, the Korean market has essentially been narrowed down to two major players. UPbit remained the primary destination. Its advantage comes from processing more trades on the more popular KRW pair.
This advantage also means higher reported depth and smoother processing. But even this surface strength could not stop funds from flowing offshore.
South Korean crypto liquidity comes under pressure from laws, shocks and price spikes
Real-world events and token behavior are changing the way South Korea handles crypto liquidity. One glaring issue is the premium for kimchi. This happens when Korean exchanges show higher prices than overseas platforms, especially when it comes to Bitcoin.
This premium does not last long, but it appears continuously. Traders then jump on the arbitrage opportunity and take liquidity across borders.
This dynamic reversed again when Bitcoin hit new highs in 2025 as the bull market brought new money into the system. Spreads have narrowed. Your order has been filled out. Top pair activity has become more active. The influx of traders added depth and made it easier to execute trades. Unlike the martial law episode, this kind of swell built a loop. High prices attracted volume, which provided liquidity and helped execution.
The kimchi premium, political shocks, and bullish cycles show how unstable South Korea's liquidity really is. The price difference continues to return. Legislation and instability can dry up your books overnight. And high prices only provide a temporary solution.
