Liquidity on South Korean crypto exchanges could seem deceptively easy on the floor, however Kaiko Analysis has found that beneath the foremost buying and selling volumes lies a way more refined and typically unforgiving market construction.
South Korea’s digital forex liquidity is difficult—change survey explains why
In that report, “Liquidity standing of the Korean digital forex market” Kaiko Analysis defines liquidity not as uncooked buying and selling exercise, however as the flexibility to shortly execute massive orders close to prevailing costs with out distorting the market, and this criterion requires greater than a single metric.
Analysts say liquidity must be assessed throughout time, market construction and execution situations, somewhat than being inferred solely from buying and selling quantity. Kaiko’s strategists stress that no single metric can absolutely seize liquidity. As an alternative, the corporate combines buying and selling quantity, bid-bid unfold, market depth, and slippage to create a multidimensional framework tailor-made to crypto markets, particularly markets dominated by particular person participation like South Korea.
Supply: Kaiko’s report “Present standing of liquidity in South Korea’s digital forex market.”
Whereas quantity is helpful, buying and selling volumes usually spike throughout stress occasions, exactly when fill high quality declines. statistician Noticed throughout market turmoil on October 10, 2025. Unfold, one other elementary metric within the Kaiko analysis framework, reveals the implicit price of immediacy. Slim spreads point out ease of entry and exit, whereas broad spreads point out elevated danger for market makers, particularly throughout spikes in volatility.
Analysts notice that crypto spreads are formed not solely by volatility, but additionally by order guide depth, platform fragmentation, and tick dimension design. In line with the market, tick dimension performs a really massive function within the Korean cryptocurrency ecosystem skilled. Massive exchanges resembling Upbit and Bithumb have traditionally favored bigger tick sizes within the KRW market, prioritizing stability and readability over very positive worth granularity.
Whereas bigger ticks mechanically widen minimal spreads, Silkworm researchers have discovered that they’ll additionally focus liquidity at fewer worth ranges, supporting seen depth and smoother execution of retail-heavy flows. Market depth is one other essential pre-trade indicator highlighted by Kaiko Analysis, measuring how a lot quantity there may be across the mid-price and the way resilient the value is to massive orders.
Nevertheless, researchers warning that the displayed depth will be deceptive because of hidden liquidity resembling stale costs, non permanent orders, and iceberg orders, all of which complicate the precise execution outcomes. To bridge the hole between what merchants see and what they’re truly getting, Kaiko Analysis depends closely on slippage evaluation. Slippage captures the distinction between anticipated and realized execution costs based mostly on real-time order guide situations, offering an execution-centric view of liquidity prices.
Nonetheless, Kaitaka emphasizes that slippage continues to be path-dependent and varies extensively by forex, asset, and time of day. The report in contrast Korean exchanges and located that liquidity was overwhelmingly concentrated in Upbit. All through 2025, Upbit accounted for about 70% of whole buying and selling quantity, with a considerably richer order guide and decrease execution friction than opponents resembling Bithumb, Coinone, and Korbit.
Buying and selling quantity knowledge for main KRW pairs resembling BTC-KRW and XRP-KRW additional strengthens Upbit’s central function. In line with Kaiko Analysis, the charge construction provides one other layer to the liquidity equation. Whereas zero-commission buying and selling fashions look engaging, the report’s authors warn that eliminating express commissions will usually end in prices being handed on to wider spreads as market makers search to recoup misplaced income. Liquidity will solely enhance if misplaced income is offset by elevated participation.
Supply: Kaiko’s report “Present standing of liquidity in South Korea’s digital forex market.”
Token-specific dynamics additionally form liquidity outcomes. Kaiko Analysis highlights the recurring incidence of “kimchi premiums” the place localized demand causes South Korean crypto costs to briefly exceed international benchmarks, attracting arbitrage flows that finally readjust costs. These episodes illustrate how regulatory constraints and capital controls fragment liquidity throughout jurisdictions.
Macroeconomic shocks pose much more extreme stress checks. Kaiko’s evaluation of South Korea’s transient declaration of martial legislation in December 2024 exhibits that headline danger, together with thinner layers and wider spreads, may cause explosive volumes, reminding us that prime volumes don’t equal simple execution.
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In distinction, Kaiko Analysis observes that bullish phases and new all-time highs have a tendency to attract new capital into the order guide, compressing spreads and replenishing depth. In different phrases, liquidity is cyclical, situational, and extremely delicate to each sentiment and construction.
In the end, the report concludes that liquidity on Korean crypto exchanges is a transferring goal formed by market design selections, charge incentives, and investor conduct. The message is evident for merchants and analysts alike. Liquidity isn’t a headline quantity, it’s a system and requires scrutiny.
Regularly requested questions 🇰🇷
- What does Kaiko Analysis consider as liquidity within the digital forex market?Kaiko Analysis defines liquidity as the flexibility to shortly execute massive trades close to market costs with out considerably impacting costs.
- Why is amount alone deceptive when assessing liquidity?In line with Kaiko Analysis, buying and selling quantity usually spikes throughout stress occasions when execution high quality deteriorates, making it an imperfect indicator.
- Which Korean change has probably the most liquidity?Kaiko Analysis discovered that UPbit dominates South Korean crypto liquidity, accounting for about 70% of whole buying and selling quantity in 2025.
- How does tick dimension have an effect on liquidity on Korean exchanges?Kaiko Analysis explains that bigger tick sizes enhance stability and show depth, however improve minimal spreads and execution prices.
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