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A zero-fee battle among South Korea’s cryptocurrency exchanges has begun to reshape the market. Coinone and DigitalX, both of which scrapped trading fees entirely late last month, have roughly doubled their market shares this month. Upbit’s share has held firm while Bithumb has slipped below 30%, prompting analysts to say that fee-sensitive investors are moving in large numbers.
Coinone’s share of 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 data from crypto information provider CoinGecko released on the 14th. DigitalX nearly doubled its share over the same period to 1.06% from 0.55%. The two exchanges’ combined share, which had been stuck in the 3% range as Upbit and Bithumb controlled more than 97% of the market, expanded to about 7% in a single month.
Coinone’s gains stand out. Its share reached 7.14% on the 6th of this month and then jumped to 8.94% on the 8th. It has since held steady in the 6% to 9% range over the past week. That means a share that had hovered around 3% before fees were eliminated has not been a one-off spike but has stayed at more than double the earlier level.
The gains are tied to the zero-fee cards the two exchanges played in quick succession late last month. After DigitalX, acquired by Mirae Asset Group, declared on the 24th of last month that it would waive trading fees on all listed tokens for one year, Coinone — which has received an investment from Korea Investment & Securities — followed just two days later by scrapping fees on all tokens as well.
What stands out is that Bithumb’s share fell sharply just as the two smaller exchanges advanced. Bithumb’s share dropped 4.97 percentage points to 29.31% this month from 34.28% in August, falling below the 30% mark. Upbit, by contrast, edged up to 63.72% from 62.43% over the same period.
Market watchers say the fallout from the zero-fee competition has so far been concentrated at Bithumb. Industry officials point to differences between Upbit and Bithumb users. Bithumb has aggressively courted cost-conscious traders with some of the industry’s lowest trading fees along with a range of discounts and promotions. Before Coinone and DigitalX went fee-free, Bithumb’s trading fee was 0.04% for users who applied for discounts, the lowest among the five major exchanges.
Upbit, as the country’s largest exchange, is instead valued for its deep liquidity. Investors who prioritize the likelihood of order execution and liquidity have relatively little incentive to switch exchanges even when fees differ. “Investors who put liquidity first choose Upbit, while fee-sensitive investors have largely used Bithumb,” an official in the crypto industry said. “There is a possibility that these investors moved as Coinone and DigitalX switched to zero fees.”
Bithumb has itself experienced firsthand the boost in market share that a zero-fee policy can bring. The exchange eliminated trading fees on all tokens in October 2023 and kept the policy in place for about four months. Its share, which had been in the 10% range before the move, climbed to above 30%. “For Bithumb, which saw a considerable gain in market share over those roughly four months, there will be no choice but to feel uneasy if Coinone and DigitalX keep their fees at zero for more than a year,” another industry official said.
#Coinone#DigitalX#Bithumb#Upbit#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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Source: en.sedaily.com