South Korean Crypto Giants Upbit and Bithumb Navigate Tumultuous Waters with Bold Strategic Shifts

South Korea’s leading cryptocurrency exchanges, Upbit and Bithumb, are confronting a challenging market landscape, reporting a significant downturn in their first-half financial performance. Both platforms experienced nearly a 50% drop in revenue year-over-year, with operating profits plummeting by over 80%. Notably, Bithumb swung from a profitable position to a substantial net loss. In response to a mass exodus of retail capital, these industry titans are aggressively pursuing equity restructuring and strategic transformations to forge a path forward amidst the “crypto winter.”

Financial Downturn: A Closer Look at the Numbers

According to official disclosures from the South Korean Financial Supervisory Service (FSS), Dunamu, the parent company of Upbit, saw its consolidated operating revenue for the first half of the year drastically fall by 49.1%. This figure dropped from 801.9 billion KRW to 408.1 billion KRW. Operating profit faced an even steeper decline of 79.7%, shrinking from 549.1 billion KRW to 111.5 billion KRW, while net profit contracted by 74.1% to 108.4 billion KRW.

Bithumb, the nation’s second-largest exchange by market share, was not immune to the downturn. Its first-half operating revenue decreased by 48.7% to 168.8 billion KRW. The most severe impact was on its operating profit, which crashed by 83.4% to a mere 14.9 billion KRW. Unlike Dunamu, which managed to maintain a fragile profitability, Bithumb, heavily reliant on transaction fees, plunged into a net loss of 108.7 billion KRW, a stark reversal from the 55 billion KRW net profit reported in the same period last year.

The Crypto Winter’s Grip: Market Contraction and Investor Retreat

This dramatic decline in performance is largely attributable to the sustained weakness in the cryptocurrency market and a pervasive liquidity squeeze. The first half of the year witnessed Bitcoin (BTC) prices fall by over 30%, dropping from $90,000 to approximately $60,000. Ethereum (ETH) experienced an even more pronounced slump, collapsing from $3,000 to around $1,600.

Beyond price depreciation, several industry-specific headwinds further eroded investor confidence. These included setbacks for the proposed U.S. “Digital Asset Market Clarity Act (CLARITY Act),” prominent institutional sell-offs such as Strategy’s partial Bitcoin holdings divestment, and significant capital outflows from U.S. Bitcoin spot ETFs. Dunamu acknowledged these factors in a press release, stating, “The recent decline in performance is attributed to the contraction of global digital asset market liquidity, leading to weakened investor sentiment.”

Korean Investors Pivot to Semiconductor Boom

A crucial factor diverting capital from the digital asset space was the robust resurgence of South Korean retail investment in the traditional stock market. Driven by surging global demand for AI memory chips, the KOSPI index experienced a more than twofold increase in the first half of the year, spearheaded by semiconductor giants like Samsung Electronics and SK Hynix. This powerful “gravitational pull” effectively siphoned liquidity away from the local cryptocurrency market.

Data from Coingecko highlights this trend, revealing that the combined trading volume of South Korea’s top five cryptocurrency exchanges—Upbit, Bithumb, Coinone, Korbit, and Gopax—in the second quarter plummeted by 49.5% year-on-year to $146.43 billion.

Strategic Transformation: Charting a New Course

Despite the substantial contraction in trading activity, both Upbit and Bithumb are actively recalibrating their equity structures and strategic roadmaps to adapt to the evolving market.

Upbit (Dunamu): Mergers, IPO Ambitions, and Strategic Alliances

Dunamu is currently engaged in a comprehensive share swap with South Korean fintech giant Naver Financial, a move that will see Dunamu become a wholly-owned subsidiary. The combined entity plans to pursue an Initial Public Offering (IPO) within five years of the merger, with a potential target of listing on the Nasdaq stock exchange in the United States.

Furthermore, Dunamu has attracted significant investments from traditional financial and industrial powerhouses. Hana Financial Group acquired a 6.55% stake for approximately 1 trillion KRW, concurrently signing a Memorandum of Understanding to collaborate on developing a Korean won stablecoin, blockchain-based cross-border remittances, and other digital asset services. Three affiliates of Samsung Group also collectively acquired a 4% stake for an estimated 613 billion KRW.

Bithumb: Delayed IPO and Market Expansion

Bithumb has opted to postpone its IPO timeline until 2028, outlining a multi-stage transformation roadmap. This includes plans to finalize internal control upgrades by 2026 and submit a preliminary listing review application by 2027.

In strategic partnership developments, Kiwoom Securities initiated negotiations in June to acquire a stake through a third-party new share allocation. Prior to this, in May, Bithumb also forged a cooperation agreement with SSI Digital, signaling its ambitions to expand into the burgeoning Vietnamese market.