South Koreans pull $41B from crypto to stocks

South Korean investors have withdrawn more than $41 billion from the cryptocurrency market over the past year, as falling bitcoin prices and collapsing trading volumes triggered a major shift towards traditional equities.

New data from the Bank of Korea showed the total value of virtual assets held by domestic investors fell to approximately $41.17 billion by the end of February 2026, down sharply from $82.76 billion at the market’s peak in January 2024.

The figures represent a decline of more than 50 per cent in just over 12 months, underlining the scale of capital flight from digital assets as investors seek safer and more stable returns elsewhere.

Bitcoin slump drives investor retreat

The decline coincided with a sharp slowdown across the wider crypto market, particularly in bitcoin trading activity, as reported by Bitcoin News. Meanwhile, average daily trading volume reportedly dropped from $11.62 billion in December 2024 to $3.06 billion by February 2026. Won-denominated exchange deposits also fell from $7.27 billion in late 2024 to $5.30 billion in February.

Analysts said the downturn was driven by a combination of falling cryptocurrency valuations and surging stock market performance, encouraging investors to rotate capital into equities.“The shift reflects an overall decline in valuation and a pivot toward more stable, interest-bearing domestic and international stock markets,” the report noted.

However, stablecoins continued to attract growing interest from South Korean investors. Holdings of dollar-pegged stablecoins climbed to a record $592.7 million in December 2024 before easing slightly to $412.5 million by February 2026. Stablecoin holdings are still more than double what they were in July 2024, when total holdings were only $60.1 million.

The crypto sell-off comes as global equity markets continue to outperform many digital assets. South Korean retail investors have increasingly redirected capital into domestic and international shares, particularly technology and artificial intelligence-related stocks, amid expectations of stronger long-term returns.

South Korea remains key crypto market

Despite the sharp decline in holdings, South Korea remains one of the world’s most influential retail crypto markets. The country has historically recorded some of the highest trading activity globally, with local investors playing a major role in bitcoin, ethereum and altcoin demand during previous crypto bull runs.

However, regulators have also tightened oversight of digital assets in recent years. South Korea will start taxing crypto gains at 22 per cent beginning January 2027. This will target investors who earn more than 2.5 million won (around $1,800) annually from digital assets. The policy is expected to affect about 13.26 million crypto investors.

According to officials, cryptocurrency revenues should be handled similarly to income from conventional investments. The National Tax Service is now collaborating with major exchanges like Upbit, Bithumb, Coinone, Korbit, and Gopax to build systems capable of managing the expected transaction volume.

Apart from this, South Korea is preparing to tighten oversight of digital assets through a proposed law that would bring stablecoins and tokenised real-world assets under existing financial regulations. A draft of the “Digital Asset Basic Act”, outlines a framework that integrates parts of the crypto sector into the country’s current legal system rather than creating entirely new rules.