Bitcoin hits record high, driving investor frenzy

The price of bitcoin is displayed on an electronic board at Upbit Lounge in Gangnam District, southern Seoul, on Tuesday. Bitcoin hit a record high of 101.98 million won ($77,847) that day. [NEWS1]

Korean investors are flocking to pick up bitcoin as the cryptocurrency continues its bullish rally both at home and abroad, driving up the prices of related stocks.

Bitcoin traded at more than 100 million won ($76,335) for the first time on Upbit, Korea’s largest cryptocurrency exchange, on Monday afternoon, and hit a record of 101.98 million won on Tuesday. The price hovered at around 101.3 million won as of 6 p.m. that day, marking a year-to-date jump of 78 percent.

Bitcoin reached a new high on the global market Monday as well, surpassing the $72,000 mark and even nearing $73,000, according to CoinMarketCap’s data. The price stood at $71,818 as of 6 p.m. Tuesday.

The recent bitcoin rally propelled an investor frenzy for other cryptocurrencies as well. Ethereum hit a fresh high of 5.73 million won on Upbit on Tuesday and traded at 5.65 million won at 6 p.m. that day, an 80 percent increase from the beginning of this year.

The combined trading volume of Korea's five major crypto exchanges between 4 p.m. Monday and 4 p.m. Tuesday amounted to 17.51 trillion won, with Upbit tallying 14.07 trillion won, Bithumb 3.02 trillion won, Coinone 300 billion won, Korbit 69.81 billion won and Gopax 49.38 billion won.

The figure surpassed that of the stock market; trading volume on the main Kospi bourse totaled 9.64 trillion won over the same period, according to the Korea Exchange.

The bull market is expected to drive up the bottom line for crypto exchanges, which collect fees per trade. Upbit, for example, charges users 0.05 percent of each transaction.

Such investor anticipations briefly pushed up crypto-related stock prices as well.

The share price of Hanwha Investment & Securities surged 8.65 percent mid-trading on the Kospi before closing at 4,515 won, up 0.11 percent from the previous trading day. The company held a 5.95 percent stake in Dunamu, the operator of Upbit, as of last September.

Woori Technology Investment, a venture capital firm that owns 7.22 percent of Dunamu, also briefly soared as high as 12.19 percent mid-trading and closed at 10,060 won, up 0.50 percent.

The global bitcoin surge has been bolstered by an inflow of capital from the U.S. bitcoin exchange-traded funds, or ETFs, which the country's Securities and Exchange Commission approved in January. Britain's financial regulator has also said that it will approve the creation of cryptocurrency-backed exchange-traded notes, or ETNs.

The imminence of bitcoin “halving,” wherein the supply of bitcoin halves every four years, is another driving factor. The event is supposed to begin in April.

“The halving, coupled with the new demand coming from ETFs, will likely support the price, but there is also potential for [additional] bitcoin and bitcoin-backed ETFs to be released into the market,” said Kim Ji-won, an analyst at KB Securities, warning that such an influx may put “downward pressure” on the price.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]