Despite rising equity inflows, South Korea’s stablecoin balances have fallen sharply since July, highlighting a shift in capital flows.
The total amount of these so-called tokenized versions of fiat currencies held in wallets associated with South Korea’s five largest cryptocurrency exchanges has plummeted by 55%, with on-chain data suggesting that the won’s breakout of 1,500 won against the U.S. dollar in mid-March triggered sharp outflows.
Data from Allium Labs tracking Ethereum and Tron wallets on Upbit, Bithumb, Coinone, Korbit and GOPAX show that total stablecoin holdings fell from $575 million in July 2025 to about $188 million as of mid-March, with the decline accelerating as the Korean won fell to a 16-year low against the U.S. dollar.
The timing suggests traders sold Tether at higher USD/KRW levels after the won fell below $1,500 against the US dollar in mid-March, a threshold not seen since the 2008 financial crisis.
DNTV Research founder Bradley Park said currency depreciation amplified incentives to exit dollar-denominated assets, with traders converting into won and redeploying into domestic assets.
The outflow marks the latest phase in South Korea’s retail capital shift away from cryptocurrencies and into equities, a shift first documented by CoinDesk in November. But the early rotation was largely narrative-driven, with traders chasing AI-related chipmakers as altcoin momentum waned, while the latest dip appears to be related to specific FX triggers rather than a change in risk appetite.
Since then, the South Korean government has stepped up efforts to attract capital into the domestic market through new policies such as “repatriation” accounts, providing up to 100% capital gains tax exemptions for investors who sell overseas assets and reinvest locally.
This shift is evident in brokerage data. Investor deposits, a proxy for cash available to buy stocks, fell from about 131 trillion won ($86 billion) at the beginning of March to about 112 trillion won ($74 billion) following currency moves mid-month, suggesting that capital is being actively allocated to stocks as stablecoin balances decline. Deposits have since stabilized, suggesting new inflows are replenishing purchasing power.
The KOSPI index has risen 75% in 2025 and has risen another 37% this year, making it the best-performing major index in the world. The rally is highly concentrated, with Samsung Electronics and SK Hynix accounting for about half of the market capitalization and more than 50% of estimated profits, making them major destinations for retail and institutional capital flows.
Stablecoin trading volumes increased across Asia last year, Artemis data shows, suggesting that the decline on Korean exchanges reflects a domestic capital rotation rather than a region-wide correction.
For the crypto market, this shift highlights the loss of one of its most important retail liquidity pools.
Historically, South Korea’s participation has amplified market cycles, and data now shows that capital is not idle but is being actively redeployed. Whether these flows return may depend more on the sustainability of South Korea’s stock market rally than the cryptocurrency narrative.
A sharp correction, especially in a market so concentrated in semiconductor stocks, could quickly force capital to rotate again. The Korea Composite Stock Price Index (KOSPI) has come under pressure recently as disruptions to oil shipments in the Strait of Hormuz stoked energy supply concerns.
