Index Plunges, Only Trading Volume Explodes…Upbit Market's 'Strange Divergence'

▲ Upbit Coin / AI-generated image ©

The domestic virtual asset market is currently experiencing a peculiar divergence, where a sharp correction in major cryptocurrencies coincides with an explosion in trading volume. While the downward gravitational pull dominating the overall market heavily weighs on top market capitalization assets, including Bitcoin (BTC), the market's strength appears to be rapidly expanding numerically. This is due to a confluence of short-term speculative funds aiming to absorb overhead selling pressure and an explosive short squeeze rally (buying pressure generated to liquidate or cover short-selling positions) in some altcoins.

Over the past week, the Upbit Composite Index underwent a typical downward adjustment, falling by 5.14% from the previous week to 10,995.8 points. Conversely, weekly trading volume surged by an impressive 23.74% compared to the previous week, reaching 10.61 trillion KRW. The Fear & Greed Index dropped by 4 points from the previous week to 45, remaining in the 'neutral' zone, indicating a stronger tendency to avoid risky assets. This implies that while the index fell, the speed of asset turnover rapidly accelerated, ushering in a period of immense volatility.

This week, the focus of Upbit's supply and demand completely shifted away from Bitcoin to payment infrastructure and altcoin themes. Among the top weekly trading volume assets, Stellar Lumens (XLM) claimed a long-awaited first place with 1.05 trillion KRW, closely followed by XRP (Ripple) with 1.02 trillion KRW. Bitcoin, the market's absolute leader, fell to third place with only 0.92 trillion KRW. This is interpreted as a result of investors concentrating on short-term leveraged trading, focusing on relatively lighter and more volatile large-cap altcoins, as Bitcoin's price defense weakened amid the US Federal Reserve's hawkish high-interest rate stance and geopolitical crises.

In terms of growth rates, the dominance of specific altcoins was remarkable. Stellar Lumens, which secured the top spot in weekly trading volume, also swept the first place in weekly growth rates with an unparalleled surge of 73.3%, followed by STRAX with 28.65% and Space ID (ID) with 25.54%. Sector-specific trends also showed clear differentiation. The advertising sector displayed the strongest momentum, rising by 13.48%, while DID (Decentralized Identity) increased by 11.69%, and enterprise blockchain by 6.59%, indicating selective capital inflow into themes with real-world usability and strong fundamentals.

Conversely, the top five assets by market capitalization received dismal report cards. Bitcoin plummeted by -6.01% on a weekly basis, and Ethereum (ETH) by -6.05%, leading the decline. XRP also fell by -2.97%, continuing its heavy trend. Even stablecoins Tether (USDT) and USD Coin (USDC) showed weakness, dropping by -1.60% and -1.67% respectively, directly reflecting the downward pressure on the Korean Won market itself. In the Worst Sector Index, the Futures/Options DEX sector bore the brunt of a plunge, falling by -29.49%. Heavy profit-taking sales poured out of DeFi-related themes that had shown strength in the previous quarter, including Liquid Staking/Restaking (-13.08%), Interoperability/Bridges (-11.34%), and Fan Tokens (-9.81%).

Ultimately, last week's Upbit market can be summarized as 'altcoin concentration amidst large-cap collapse + trading volume paradox'. While the index's backbone was broken by macroeconomic headwinds, over 10 trillion KRW in capital was highly concentrated in specific assets like Stellar Lumens and XRP, leading to active rotation even in a bearish market. Market experts diagnose the current market as one that demands high-risk, high-return strategies, precisely tracking the flow of funds and identifying themes that can trigger short squeezes in a dried-up circulating liquidity environment, rather than betting on the overall market direction.

▲ [Dunamu] Upbit Datalab Weekly Report 0525-0531

Meanwhile, Upbit Datalab is a specialized data service provided by Dunamu, which operates the digital asset exchange Upbit. It offers standard indicators for fundamental analysis of the virtual asset market, including the Upbit Composite Index (UBCI), market trends, and sector classifications. The composite index is calculated with October 1, 2017, as the base point (1000), and the Fear & Greed Index is derived every 5 minutes by synthesizing 24-hour execution price and trading volume data within Upbit.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*