In its report, “The State of Liquidity on Korean Crypto Markets,” Kaiko Research defines liquidity not as raw trading activity, but as the ability to execute sizable orders quickly and close to prevailing prices without distorting the market, a standard that demands more than a single metric.

According to the analysts, liquidity must be evaluated across time, market regimes, and execution conditions rather than inferred from volume alone. Kaiko‘s strategists emphasize that no single indicator captures liquidity in full. Instead, the firm combines trading volume, bid-ask spreads, market depth, and slippage to build a multidimensional framework tailored to cryptocurrency markets, particularly those dominated by retail participation like South Korea’s.

Source: Kaiko’s report called “The State of Liquidity on Korean Crypto Markets.”

Volume, while useful, often spikes during stress events precisely when execution quality deteriorates, a dynamic Kaiko statisticians observed during the Oct. 10, 2025, market dislocation. Spreads, another cornerstone metric in Kaiko Research’s framework, reveal the implicit cost of immediacy. Narrow spreads signal easier entry and exit, while wider spreads point to heightened risk for market makers, especially during volatility spikes.

The analysts note that spreads in crypto are shaped not only by volatility, but also by order book depth, platform fragmentation, and tick-size design. Tick sizes play an outsized role in Korea’s crypto ecosystem, according to the market specialists. Major exchanges such as Upbit and Bithumb have historically favored larger tick sizes in KRW markets, prioritizing stability and readability over ultra-fine price granularity.

While larger ticks mechanically widen minimum spreads, Kaiko researchers find they can also concentrate liquidity at fewer price levels, supporting visible depth and smoother execution for retail-heavy flows. Market depth, another key pre-trade metric highlighted by Kaiko Research, measures how much volume sits near the midprice and how resilient prices are to larger orders.

However, the researchers warn that displayed depth can be misleading due to quote staleness, fleeting orders, and hidden liquidity, such as iceberg orders, all of which complicate real-world execution outcomes. To bridge the gap between what traders see and what they actually get, Kaiko Research relies heavily on slippage analysis. Slippage captures the difference between expected and realized execution prices based on real-time order book conditions, offering an execution-centric view of liquidity costs.

Even then, Kaiko stresses that slippage remains path-dependent and varies sharply by exchange, asset, and time of day. When comparing Korean exchanges, the report finds that liquidity is overwhelmingly concentrated on Upbit. Throughout 2025, Upbit accounted for roughly 70% of total trading volume, with significantly deeper order books and lower execution friction than competitors such as Bithumb, Coinone, and Korbit.

Trade count data for major KRW pairs like BTC-KRW and XRP-KRW further reinforces Upbit’s central role. Fee structures add another layer to the liquidity equation, according to Kaiko Research. While zero-fee trading models appear attractive, the report’s authors caution that eliminating explicit fees often shifts costs into wider spreads as market makers seek to recover lost revenue. Liquidity improves only if increased participation offsets the lost income.

Source: Kaiko’s report called “The State of Liquidity on Korean Crypto Markets.”

Token-specific dynamics also shape liquidity outcomes. Kaiko Research highlights the recurring “Kimchi premium,” where localized demand temporarily pushes Korean crypto prices above global benchmarks, attracting arbitrage flows that eventually realign prices. These episodes illustrate how regulatory constraints and capital controls fragment liquidity across jurisdictions.

Macroeconomic shocks provide an even starker stress test. Kaiko’s analysis of South Korea’s brief December 2024 martial law declaration shows how headline risk can trigger explosive volume alongside thinner depth and wider spreads, a reminder that high turnover does not equal easy execution.

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In contrast, Kaiko Research observes that bullish phases and new all-time highs tend to draw fresh capital into order books, compressing spreads and replenishing depth. Liquidity, in other words, is cyclical, contextual, and deeply sensitive to both sentiment and structure.

Ultimately, the report concludes that liquidity on Korean crypto exchanges is a moving target, shaped by market design choices, fee incentives, and investor behavior. For traders and analysts alike, the message is clear: liquidity is not a headline number—it is a system, and it demands scrutiny.

• What does Kaiko Research mean by liquidity in crypto markets?
  Kaiko Research defines liquidity as the ability to execute large trades quickly and near market prices without significant price impact.
• Why is volume alone misleading when assessing liquidity?
  According to Kaiko Research, volume often spikes during stress events when execution quality worsens, making it an incomplete indicator.
• Which Korean exchange has the deepest liquidity?
  Kaiko Research finds that UPbit dominates Korean crypto liquidity, accounting for about 70% of total trading volume in 2025.
• How do tick sizes affect liquidity on Korean exchanges?
  Kaiko Research explains that larger tick sizes improve stability and visible depth but increase minimum spreads and execution costs.

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