Bithumb, South Korea's second-largest cryptocurrency exchange, has seen its market share slip below 20%. The exchange has rarely dipped into the 10% range, but with Digital X backed by the firepower of Mirae Asset Securities and pushing an aggressive zero-fee policy, attention is turning to whether the exchange landscape could shift going forward.
According to data from crypto information provider CoinGecko on the 25th, Bithumb held a 19.8% market share among South Korea's five won-based exchanges as of the previous day. Bithumb had earlier slid to 19% on the 3rd, and it has now dropped below 20% again after three weeks. Meanwhile, top exchange Upbit held a 77.8% share as of the previous day, widening its lead over Bithumb to nearly fourfold. Coinone came in at 2.1%, Digital X at 0.18% and Gopax at 0.03%.
Bithumb had maintained a share in the 30% range through the first half of this year. Recently, however, the decline has been pronounced. Bithumb's weekly average share fell about 5 percentage points, from roughly 34% in the first week of June to 29% last week. Over the same period, Upbit rose 14 percentage points, from 54% to 68%, widening the gap between the two.
The market attributes this to a recent decline in cryptocurrency trading volume, which has pushed investors toward Upbit, where liquidity is relatively abundant. When trading contracts, investors tend to flock to large exchanges where bid and ask prices are tightly clustered, allowing them to trade quickly at desired prices. On exchanges with low trading volume, thin order books can delay execution or cause prices to swing sharply even on small orders.
The concern is Digital X. Starting on the 24th, Digital X announced a zero trading-fee policy for all members. Unlike typical promotions that offer short-term benefits on select coins, this is a bold move that waives fees on all coins for a full year. It is a decisive bid to draw customers away from Upbit and Bithumb and break the entrenched two-way rivalry. On the 24th, the first day the free-fee policy took effect, Digital X's share rose just 0.01 percentage point from the previous day, but the industry view is that customers turning to Digital X could grow over time. In particular, the prevailing analysis is that if Mirae Asset's capital strength and customer base are added, there is a strong chance the share could climb quickly.
Indeed, major exchanges are closely watching Digital X's moves. Bithumb is waging a defensive fight to stem investor outflows and lure in rivals' customers. It currently waives fees up to five times the certified amount for customers who verify a record of trading at least 1 billion won ($740,000) per month on average at another exchange or brokerage, and provides up to 10 million won ($7,400) in investment support. Upbit has said it will watch the situation for now, but many predict that a counterattack will be unavoidable if Digital X's surge intensifies.
In particular, with bitcoin breaking through $80,000 for the first time in three months, investor sentiment is gradually reviving, prompting some to suggest that the second half of this year could be a turning point that reshapes the exchange landscape. Market share will depend on who first captures investors returning to or newly entering the market. An official in the cryptocurrency industry said, "This rally could be a turning point in the reshaping of the domestic exchange market," adding, "The key is whether Digital X, leading with zero fees, can absorb the investors flowing into the market."
