The earnings of major cryptocurrency exchanges have plummeted by half in just three months, reflecting the impact of a sharp decline in Bitcoin prices. Following a record-breaking first quarter driven by soaring Bitcoin values, the recent downturn in asset prices has led to a significant drop in overall trading volumes.
According to the Financial Supervisory Service’s electronic disclosure system, Dunamu, the operator of South Korea’s largest cryptocurrency exchange Upbit, reported consolidated revenue of 257 billion won ($188.8 million) for the second quarter, marking a staggering 52 percent decline compared to the first quarter.
The company’s operating profit also suffered, falling 53 percent from 335 billion won to 159 billion won. Despite this sharp decline, Dunamu’s overall performance showed improvement compared to the “crypto winter” of the previous year. Year-over-year, sales rose by 27.4 percent, operating profit increased by 45.5 percent, and net income grew by 30 percent.
Bithumb, South Korea’s second-largest exchange, was not spared from the downturn. The exchange reported second-quarter revenue of 104.7 billion won, with an operating profit of 32.3 billion won. This represents a nearly 50 percent drop in operating profit from the 62 billion won recorded in the first quarter.
The decline in earnings is attributed to the cooling of major growth drivers, including the approval of overseas spot exchange-traded funds (ETFs) for major cryptocurrencies. In March, Bitcoin prices soared to a record high of $73,750, but the market quickly cooled as prices fell below $60,000. Additionally, geopolitical risks, such as the ongoing conflict between Israel and Hamas, have contributed to price volatility, causing investors to shy away from risky assets.
Cryptocurrency exchanges, which rely heavily on trading fees for revenue, have been hit hard by the reduced trading volumes. An official from Bithumb acknowledged the challenging market conditions, stating, “Although market conditions improved compared to last year, resulting in noticeable performance growth, the pace of growth slowed in the second quarter. We will continue to focus on improving user-centered services and offering benefits in order to set new agendas in the market. At the same time, we will strive to maintain steady growth moving forward.”
As the cryptocurrency market faces heightened uncertainty, exchanges like Upbit and Bithumb are navigating a challenging landscape, seeking to balance user-focused initiatives with the need to maintain profitability amidst fluctuating asset prices.
