Is crypto catching up to Tradfi?

Introduction

Since the approval of the Bitcoin ETF, cryptocurrencies have moved beyond mere speculation and have been recognized as "assets" on par with traditional financial asset classes. However, despite these changes, the size of the crypto market is still in its infancy compared to traditional financial markets. For example, the total market capitalization of the global stock market is $109 trillion, while the total market capitalization of the cryptocurrency market is only $2.7 trillion.

Recently, the cryptocurrency market has shown signs of resurgence, leading some analysts to posit that its growth potential could rival that of traditional financial markets. This report will delve into a comparative analysis of the activities within cryptocurrency markets versus traditional financial markets. In particular, we compare the trading volumes of crypto exchanges and traditional stock markets in each country to provide insights into the current position and potential of crypto markets.

1. Crypto surpasses stocks in South Korea

The South Korean cryptocurrency market recently achieved a significant milestone by exceeding the daily trading volumes of both the KOSPI and KOSDAQ, underscoring the considerable interest and enthusiasm for cryptocurrencies among Koreans. KOSPI (Korean Composite Stock Price Index) is a representative stock market in Korea where large companies are listed, so the fact that the cryptocurrency market has surpassed the index is significant.

This phenomenon is more remarkable when considering that KOSPI and KOSDAQ accommodate substantial institutional and foreign investor participation. In contrast, the Korean cryptocurrency market is limited to retail investors residing in Korea.

The prevailing enthusiasm for the cryptocurrency market among Koreans is in line with the distinctive investment appetite of Korean retail investors. As detailed in our earlier report, "4 Characteristics of the Korean crypto market," there is a pronounced preference among Koreans for so-called "lottery-type stocks" — assets perceived to offer the potential for substantial returns. This inclination towards high-risk, high-reward investments is mirrored in the stock market dynamics, where the KOSDAQ, known for its higher volatility compared to the KOSPI, records greater trading volumes.

2. Japan's crypto trading volume pales in comparison to stock market

Despite Japan's active government-led approach to the cryptocurrency market, its trading volume remains modest, especially when juxtaposed with that of South Korea's cryptocurrency market. A recent analysis of the average daily trading volumes within a given month reveals that South Korea's cryptocurrency market experiences approximately 16 times the trading volume observed in Japan. This stark contrast indicates the differing market activity levels and investor engagement between the two countries.

Nevertheless, the Japanese crypto market itself has been growing at a significant level.?The average daily trading volume of the Japanese crypto market has more than tripled in comparison to the same period last year. While the Japanese stock market still surpasses the crypto market in trading volume, the narrowing gap between the two is a testament to the crypto market's robust expansion and increasing investor interest.

Furthermore, the Japanese government's proactive stance in facilitating the growth of the cryptocurrency market, particularly through the easing of regulatory barriers, is poised to further bridge the trading volume gap between cryptocurrencies and the stock market.

3. Indonesia has more investors in the crypto market than the stock market.

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