[Bitcoin Now] Performance Worsens and Fears of a Price War Rise... Red Flag for the Crypto Industry

Sales at Top Two Crypto Exchanges Halved
Dunamu's Net Profit Drops 74 Percent; Bithumb Swings to Loss
Concerns Rise Over Fierce 'Fee-Free' Competition from DigitalX

Due to the widespread trading slump that swept across the virtual asset market, the first-half earnings of South Korea’s top two exchanges deteriorated sharply. While major exchanges that had relied heavily on transaction fee income have taken a direct hit to their profitability, DigitalX (formerly Korbit), which has recently rebranded and reorganized, has unveiled a bold move by making all transaction fees fully free for one year. As a result, in addition to worsening performance, there are signs of renewed fierce competition for market share.

According to the Financial Supervisory Service’s Electronic Disclosure System on August 25, Dunamu (operator of Upbit), the country’s leading virtual asset exchange, posted an operating profit of 111.5 billion won in the first half of this year, marking a 79.7% decrease year-on-year. Its operating revenue, which reflects sales, also dropped 49.1% to 408.1 billion won.

Second-ranked Bithumb saw its first-half operating profit fall by 83.4% year-on-year to 14.9 billion won, with operating revenue declining 48.7% to 168.8 billion won. In addition, it posted a net loss of 108.7 billion won, shifting into the red.

This lackluster performance is believed to be due to the contraction of trading activity in the market. According to CoinGecko, a virtual asset data analytics platform, the combined transaction volume of South Korea’s top five exchanges in the second quarter was 146.43 billion dollars, down 49.5% year-on-year. With a bullish stock market drawing significant investment capital into equities and regulatory moves fueling an accelerated shift of domestic trading activity to overseas exchanges, Korea’s domestic crypto trading volume has contracted sharply. Tiger Research, a Web3 analytics company, estimates that about 700 trillion won has flowed out from domestic exchanges to overseas markets from 2021 to 2026. In 2025 alone, roughly 168 trillion won was moved abroad, with a projected 77 trillion won flowing out in 2026.

As exchanges took a direct hit from the slump in trading volume, it has become increasingly evident that domestic exchanges face fundamental limitations, especially in sustaining fixed costs during prolonged bear markets. This is a stark contrast to global exchanges such as Binance and Coinbase, which have bolstered their resilience through diversified revenue portfolios, including asset custody, staking services, derivatives like futures and options, and institutional solutions.

Junho Lee, an analyst at Hana Securities, noted, "Because transaction fees generated from won-denominated markets account for most of their sales, the firms have taken a substantial blow from the contraction of the digital asset market." He added, "Ultimately, unless they can evolve into blockchain infrastructure companies like global exchanges have, their limitations will remain clear."

Amid slumping results due to shrinking trading activity, fee competition also appears poised to reignite.

Starting from August 24, DigitalX made all trading fees in the won market fully free for a year. Having recently rebranded after being acquired by Mirae Asset Group, the company is moving aggressively to expand its share of the market with this unprecedented fee waiver. Sejin Oh, CEO of DigitalX, stated, "Beyond fee-free trading, we are also preparing a diverse lineup of products and services that can open a new horizon for the digital asset market." He added, "With a close alliance with Mirae Asset Group, we aim to create differentiated competitiveness that no one can imitate."

Given that Bithumb and others previously implemented short-term fee-free policies to boost market share, a year-long free trading campaign is highly likely to spur an influx of users. Based on last year’s trading volume, DigitalX’s market share in the domestic won-based crypto exchange segment was 0.5%. Upbit held 69%, Bithumb 28%, Coinone 2%, and GOPAX 0.1%.

With DigitalX moving aggressively to expand its market share, there is attention on whether the entrenched two-leader market structure will be shaken. One industry official commented, "With major exchanges constrained in their ability to launch new marketing initiatives due to deteriorating earnings, this fee-free offensive could create some cracks in the traditionally monopolized market structure. The less an exchange has diversified its sources of profitability, the greater the impact it will feel from this shift in trading volume," the expert noted.

In particular, experts believe that once the Virtual Asset User Protection Act comes into effect, raising legal and regulatory entry barriers, the industry will inevitably consolidate around major players that possess both strong capital and robust compliance infrastructure.

In fact, the trend toward partnerships with the traditional financial sector has been accelerating in the market. In addition to Mirae Asset Group’s acquisition of Korbit and its transformation into DigitalX, the third-largest exchange, Coinone, has also been reorganizing its capabilities, securing capital and strategic ties with major securities firms such as Korea Investment & Securities.

With large securities firms leveraging their ample capital and asset management know-how to enter the virtual asset market in force, competition is expected to intensify beyond the simple exchange business to cover integrated asset management platforms, including token securities (STO) and related financial products.

This content was produced with the assistance of AI translation services.