Helpless because you can’t make money for the future, looking to the cryptocurrency market but disillusioned with getting rich

For a young woman studying at a university in Seoul, the recent roller coaster of the cryptocurrency market has left her in a state of constant turmoil. The recent drop has been seen as a hellish week for crypto investors. The girl shared: “I can’t think of anything. I can’t stand it.”

Like many Koreans her age, she has invested a considerable amount of her savings. She spent 1 million won ($900) into the cryptocurrency market to increase her savings for the future, as having a backup fund becomes increasingly difficult for the younger generation of South Korea. When the price of cryptocurrencies surged in April, she made an unrealized profit of 5 million won, but then the market quickly plunged 40%.

While her initial investment was intact, she knew that many of her friends were deep in losses. “I’m going to have to hold until the price rebounds. However, I’m not sure how many years,” she said.

According to industry estimates, South Korea has become a hotbed of cryptocurrency speculation. The speculative craze has spawned a new phrase “kimchi premium” – describing a situation where the price of Bitcoin in South Korea is higher than the rest of the market, at times exceeding 20% ​​gains.

While it may be the most popular digital currency, Bitcoin accounts for less than 10% of trading volume in South Korea. More than 90% of the remaining are altcoin transactions, including coins of unknown origin.

For the most part, cryptocurrency investing in South Korea is done by people in their 20s and 30s. In the first quarter of 2021, 2.5 million new accounts were opened on the country’s four largest cryptocurrency trading platforms, according to Kwon Eun-hee, a representative of the People’s Power Party. Of those, 33% are in their 20s, while 31% are in their 30s.

Job search portal Alba Heavne conducted a survey with 1,750 students and published it on May 31. Among them, 53% have a positive view of investing in cryptocurrencies. Those who invest in cryptocurrencies themselves make up 24%.

Among the supporters of cryptocurrency trading, 33% cite high profitability as their attraction. What’s more worrying is that 15% said cryptocurrencies serve as “the last chance to escape their current position in society”.

Young Koreans today are increasingly impatient, along with the opportunity to increase their financial ability is not as high as previous generations. Even the winners of the tough race to become employees of one of the nation’s leading corporations cannot afford to buy a home, due to the housing real estate bubble.

These pressures have led many young Koreans to believe that the usual path to happiness that parents have taken – getting married, buying a house and having children, is now unattainable. Therefore, investing in cryptocurrencies and stocks is an opportunity for them to change their lives.

Against this backdrop, Eun Sung-soo, chairman of the Korean Financial Services Commission, received criticism from young people after making comments against cryptocurrencies and traders during a hearing in September. before. His comments come after a lawmaker expressed concern about the way cryptocurrency exchanges are not subject to investor protections. The daily trading volume has been twice as high as that of the Korea Composite Stock Price Index.

“Cryptocurrencies are not securities assets bound by the Capital Markets Act, but virtual assets of unknown origin,” said Mr. Eun. He also adamantly refuses to call people who buy cryptocurrencies as investors.

In addition, he said: “It is not the government’s duty to protect them. If they go in the wrong direction, the adults must warn them that they are making a mistake.”

Accordingly, these comments caused a backlash the very next day. One even sent a letter to the Blue House website and called for Mr. Eun to resign.

South Korean authorities have been introducing measures to control cryptocurrencies. The revised law that was implemented in March requires cryptocurrency trading platforms to cooperate with banks, to ensure transactions are conducted in real names by the end of September. Non-compliant platforms will be forced to must stop trading.

These measures are put in place to prevent other illegal, money-laundering practices. According to Nikkei, the aim of the regulators is to force smaller trading platforms to close. South Korea currently has four major cryptocurrency trading platforms – Bithumb, Upbit, Coinone and Korbit, all of which are partnered with banks namely Shinhan Bank, Nonghyup Bank and online lender K Bank.

Most Korean banks are hesitant to cooperate with cryptocurrency exchanges. The reason comes from concerns related to anti-crime activities, along with the negative stance towards this market of financial agencies.

The Korean market is already saturated with more than 200 crypto platforms. While some small to mid-sized banks are willing to create partnerships, most platforms do not have a bank relationship. Therefore, it is likely that a large number of platforms will have to shut down in September.

Meanwhile, young Koreans mostly borrow to invest in cryptocurrencies. Household debt rose 8% at the end of 2020 from a year ago, the Bank of Korea said, but debt among those aged 20-39 has increased by 17%. It seems that the young generation of this country is eager to get rich even though they have to borrow money.

Currently, countless altcoins are circulating on the Korean cryptocurrency market. This has caused overload for trading platforms and weak data systems, resulting in halted transactions. In addition, there are also many scammers who promise to bring a lot of money to gullible people.

Refer to Nikkei