Direct Hit to Coin Market Slump... Tangled Exchange Earnings

Dunamu Q1 Revenue Down 28.63% YoY
Impact of Declining Cryptocurrency Prices Including Bitcoin
Investor Sentiment Index at 'Extreme Fear'
Q2 Performance Improvement Uncertain

The first-quarter earnings of Dunamu, which operates 'Upbit,' the leading cryptocurrency exchange by market share, and Bithumb Korea, which operates 'Bithumb,' the second largest, have declined amid the cryptocurrency downturn. In particular, Dunamu, which joined not only large business groups but also mutual investment restriction groups due to its record-breaking performance last year, failed to overcome the frozen investment sentiment this year.

According to the Financial Supervisory Service's electronic disclosure system on the 31st, Dunamu's consolidated sales for the first quarter of this year amounted to KRW 426.87137 billion, down 28.63% compared to the same period last year. For Dunamu, 98.84% of total sales come from transaction platform fee revenues such as Upbit, Securities Plus, Securities Plus Unlisted, and Upbit NFT (Non-Fungible Tokens), but these revenues decreased sharply by 28.95% compared to the same period last year.

The decline in operating profit was even greater than that of sales. It recorded KRW 287.88259 billion, shrinking by 46.89%. This was largely due to a surge in operating expenses from KRW 56.05109 billion in the first quarter of last year to KRW 138.98878 billion this year. Salaries increased 1.96 times from the previous quarter to KRW 15.6348 billion, and welfare expenses expanded 107.20 times to KRW 70.61797 billion.

The situation for Bithumb Korea was not much different. For Bithumb Korea, transaction fee income accounts for 100% of total sales, and its first-quarter sales this year were KRW 124.78631 billion, down 50.12% compared to the same period last year. Operating profit recorded KRW 84.51344 billion, a decrease of 61.19%. Operating expenses increased by 19.59% compared to last year, significantly impacting the decline in profits.

The sharp drop in first-quarter sales of the two major cryptocurrency exchanges is analyzed as a result of the cryptocurrency market downturn. During the first quarter of last year, the price of 'Bitcoin,' which leads the coin market, showed an upward trend. According to the global cryptocurrency market data site 'CoinMarketCap,' Bitcoin's price was $29,296 (approximately KRW 36.25 million) on January 1 last year and rose to $58,903 (approximately KRW 72.93 million) by March 31. It also reached an all-time high of $67,567 (approximately KRW 83.72 million) on November 8, enjoying a boom throughout last year. As a result, Dunamu's total assets, which were around KRW 1.3 trillion, exceeded KRW 10 trillion within a year, designating it as a large business group (publicly disclosed business group) with total assets over KRW 5 trillion. It also became part of the mutual investment restriction group with total assets exceeding KRW 10 trillion. Likewise, Bithumb Korea also achieved record-high performance. However, in the first quarter of this year, concerns about economic recession and the U.S. Federal Reserve's (Fed) interest rate hike policy caused Bitcoin prices to decline. The price fell from $48,054 on January 1 to $33,503 on January 24, rose to the $45,000 range in February, but then gave back gains and dropped to the $34,000 range. March also saw rollercoaster movements.

The second quarter of this year shows no signs of improvement. Earlier this month, the crash of 'Luna Classic' and 'TerraUSD (UST)' occurred, causing Bitcoin prices to fall below $30,000 on the 11th, dropping to $28,936 (approximately KRW 35.9 million). Investment sentiment has also struggled to recover. According to cryptocurrency data provider Alternative, the Fear & Greed Index indicating investment sentiment was 16 points (extreme fear) on that day, a 12-point drop compared to early this month.

Professor Hong Ki-hoon of the Department of Business Administration at Hongik University explained, "When Bitcoin prices fall, the overall cryptocurrency prices drop, which reduces the transaction fee income of exchanges. Due to incidents like the Luna crisis, it is highly likely that second-quarter earnings will also not be good."

This content was produced with the assistance of AI translation services.