In recent days, retail traders in South Korea have flocked to two cryptocurrencies, XRP and Dogecoin (DOGE), reflecting a clear sign of a recovery in risk appetite in the crypto market. The trading volume of these two tokens on local exchanges has surpassed both Bitcoin (BTC) and Ether (ETH) in the past 24 hours, indicating a strong shift in investment trends.
According to expert opinions, the strong increase of XRP and DOGE is occurring against the backdrop of a returning risk appetite in the market, as trade tensions between the United States and China ease and macro indicators suggest a possibility of interest rate cuts by the end of this year. Both XRP and DOGE have recorded increases of more than 15% in the past week, far surpassing the 10% rise of Bitcoin. Notably, Ether (ETH) surged nearly 40%, marking the largest weekly gain since 2021.
The recovery of risk assets
"The strong recovery of risk assets is happening at an incredible pace, to the extent that even the most hardened bears are starting to take notice," said Augustine Fan, Director of Analysis at crypto options platform SignalPlus. "We believe the market is still being forced to trade at high prices, and this trend will continue until most macro short positions are forced to retreat."
According to data from UpBit – the largest cryptocurrency exchange in South Korea – the total trading volume in the past 24 hours for the XRP/KRW and DOGE/KRW pairs has both exceeded 270 million USD, far higher than the more than 180 million USD recorded for Bitcoin and Ether. This discrepancy not only reflects the inflow of capital into highly volatile assets but also indicates a clear shift in the risk appetite of retail investors in South Korea – a market known for its strong speculative phases and often leading global trends.
The phenomenon of individual investors rushing into highly volatile assets is not new in the South Korean crypto market. In the past, this market has witnessed many phases of strong speculative booms – often referred to as the "Kimchi Premium" – when the prices of digital assets in South Korea were significantly higher than the global average. Such phases typically reflect an exuberant investment sentiment, where local investors accept high risks to seek short-term profits. In fact, South Korea has long been seen as a reliable barometer for overall retail market sentiment.
The current context is also being driven by positive geopolitical factors. One of the most notable drivers is the progress in trade relations between the United States and China. On Monday, officials from both sides announced plans to significantly reduce tariffs on certain items – from 145% to 30% – over a period of 90 days. This information has somewhat alleviated long-standing concerns about the risk of trade conflict between the two largest economies in the world, thereby boosting optimism in risk asset markets, including cryptocurrencies.
Theo Jeff Mei, COO at BTSE exchange, the positive outlook in trade relations between the United States and China is helping to ease investor concerns about the crypto market.
"Optimism is returning as the two largest economies in the world make progress in trade negotiations, while increasing expectations of interest rate cuts have significantly supported market sentiment," he remarked.
Mei also emphasized that if the U.S. Federal Reserve (Fed) signals a shift to a dovish stance in the upcoming policy meeting, this could act as a catalyst to push Bitcoin to all-time highs, while also stimulating lending and investment activities in the U.S. economy.
Although investors are still closely monitoring the developments of ETF capital flows as well as expected monetary policy signals to be announced in June by central banks, in the short term, altcoins are the main driving force behind the current rally in the market. Analysts note that, while there are no clear signs of ETF flows into Ether, much of the recent gains in altcoins are a result of position adjustments by domestic speculators – particularly in Asia – rather than from large long-term institutional capital flows. This indicates that the current recovery is primarily endogenous, reflecting a rapid change in speculative sentiment and short-term trading strategies.