Bitcoin Falls as Kospi Soars 77.9%; Korean Crypto Exchanges Face Squeeze

Global stock markets have rallied this year on gains in artificial intelligence and semiconductor shares, while digital assets alone have remained mired in a slump, iM Securities said. Pressure is also mounting on South Korean exchanges, which have limited room to diversify revenue, as Coinbase, the largest US crypto exchange, posted a steep loss and moved to cut about 700 jobs.

In a May 12 report, iM Securities said the Kospi has surged 77.9% this year and the Nasdaq has risen 14.8%. By contrast, major cryptocurrencies have declined, with Bitcoin down 9.1% and Ether falling 22.2%.

The slide in the crypto market has directly hurt exchange earnings. Coinbase reported revenue of $1.41 billion in the latest quarter, down 21% from the previous quarter. It also posted a net loss of $390 million, reversing into the red. Retail trading volume, its main source of revenue, shrank 54%, dealing a direct blow to its spot-trading-focused business model.

Hit by the earnings setback, Coinbase announced plans to cut about 700 jobs while accelerating efforts to diversify its revenue streams. The company is trying to reduce its reliance on spot trading by acquiring derivatives exchange Deribit and expanding into areas including the stablecoin USDC and payment networks for AI agents.

South Korean crypto exchanges, by contrast, have little in the way of a clear breakthrough. As sentiment toward digital assets has cooled, average daily trading value this year has dropped 44.0% at Upbit and 48.2% at Bithumb from the second half of last year. Coinone and Korbit sought to revive trading with zero-fee policies and other promotions, but volumes fell again after those events ended.

Experts say the vulnerability of Korean exchanges stems from the country's strict regulatory environment. In South Korea, institutional trading, spot exchange-traded funds, stablecoins and derivatives trading are all effectively blocked by regulation. Yang Hyun-kyung, an analyst at iM Securities, said domestic exchanges still rely overwhelmingly on fee-based revenue, leaving earnings directly exposed to declines in trading volume. For now, improvement in sentiment across the broader crypto market will be the most important variable for performance, she added.