Coinone Doubles Market Share as Zero

A zero-fee battle among South Korean cryptocurrency exchanges has begun to shift actual market share. Coinone and Digital X, which scrapped trading fees late last month, have roughly doubled their shares in September. While Upbit’s dominance has held largely unchanged, Bithumb’s share has fallen below 30%, prompting analysts to say that fee-sensitive investors are moving to smaller exchanges.

Coinone’s share among the country’s five major won-based exchanges rose to 5.9% this month from an August average of 2.72%, more than doubling, according to cryptocurrency data provider CoinGecko on the 14th. Digital X nearly doubled its share over the same period, to 1.06% from 0.55%. With Upbit and Bithumb accounting for more than 97% of all trading, the two smaller exchanges had been stuck in the 3% range on a combined basis, but that figure approached 7% in just one month.

Coinone’s gains are also clear in daily figures. Its share climbed to 7.14% on the 6th of this month and rose further to 8.94% on the 8th. It has since moved between 6% and 9% over the past week, holding above earlier levels. Rather than spiking temporarily and falling back, the share has stayed at more than double the roughly 3% it held before fees were eliminated.

The shift coincides with a fee-cutting race that began late last month. Digital X, acquired by Mirae Asset Group, announced on the 24th of last month that it would waive trading fees on all listings for one year. Coinone, which has received investment from Korea Investment & Securities, joined two days later by cutting trading fees to zero across all listings.

Bithumb has lost the most ground as the two exchanges gained. Its share fell 4.97 percentage points to 29.31% this month from 34.28% in August, dropping below the 30% line. Upbit, by contrast, edged up to 63.72% from 62.43%, holding its share in the low 60% range.

Market watchers say the zero-fee competition has so far hit Bithumb harder than Upbit, pointing to differences in the two large exchanges’ customer bases. Bithumb has drawn cost-sensitive investors by aggressively using low trading fees along with discounts and promotions. Before Coinone and Digital X went fee-free, users who applied for discounts could see Bithumb’s trading fee drop to 0.04%, the lowest among the five major exchanges.

Upbit is in a different position. As the country’s largest exchange, its deep liquidity itself serves as a competitive edge in retaining users. Investors who value the ability to trade quickly at their desired price over fee levels have relatively little incentive to move even when other exchanges eliminate fees. “Investors who prioritize liquidity choose Upbit, while fee-sensitive investors have largely used Bithumb,” an official in the cryptocurrency industry said. “There is a possibility that these investors moved as Coinone and Digital X switched to zero fees.”

Ironically, Bithumb was among the first exchanges to experience the power of zero fees. It eliminated trading fees on all listings in October 2023 and maintained the policy for about four months, lifting its share from the 10% range at the time to more than 30% at one point. Another industry official said, “From the standpoint of Bithumb, which saw a considerable share gain over about four months back then, there will be no choice but to feel uneasy if Coinone and Digital X keep fees free for more than a year.”

#Coinone#Bithumb#Upbit#DigitalX#CryptoExchange#ZeroFees

Original reporting by Kim Jung-woo for Seoul Economic Daily.

AI-translated from Korean. Quotes from foreignxact original wording

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