Stablecoin balances on Korean exchanges plunge 55%… funds rotate into equities amid won weakness

Stablecoin holdings on domestic virtual-asset (cryptocurrency) exchanges have dropped sharply, making the rotation of funds into the stock market increasingly evident.

According to CoinDesk on the 23rd (local time), stablecoin balances in wallets linked to five major exchanges—Upbit, Bithumb, Coinone, Korbit and Gopax—fell about 55%, from roughly $575 million in July last year to around $188 million in mid-March this year.

The outflow is seen as coinciding with the period when the won-dollar exchange rate broke above 1,500 won. As the won’s value slid sharply, demand rose to convert dollar-based assets such as stablecoins into won and reallocate into domestic assets.

Reports said that during the upswing in the exchange rate, investors sold dollar assets including Tether (USDT), switched into won, and directed the proceeds into equities.

The rotation into Korean stocks is also reflected in market indicators. Investor deposits fell from about 131 trillion won in early March to around 112 trillion won by mid-month, suggesting that sidelined cash moved into actual share purchases.

Meanwhile, the KOSPI has extended a strong rally recently, posting one of the higher returns among major global benchmarks. In particular, funds have been concentrating in large-cap semiconductor names such as Samsung Electronics and SK hynix.

Market participants view the move less as a simple retreat from risk assets and more as a reallocation driven by currency swings. Still, if volatility in the domestic equity market increases, some funds could flow back into the crypto market, observers say.