South Korean cryptocurrency exchanges are struggling with the ongoing market dip as two of the major local players, Upbit and Bithumb, reported a massive decline in sales and profits in the first half of 2022.

The data from South Korea’s Financial Supervisory Service (FSS) show that the sales of Dunamu, the operator of Upbit, came in at 785 billion won (nearly $586 million) in the six months, which was a yearly decline of 61.3 percent.

The net profit of the exchange, which happens to be the largest crypto trading platform in the country, took a massive hit as it declined 88.2 percent to 172.8 billion won ($129 million). While the company generated a net profit of 206.8 billion won in the first quarter with a loss of 34 billion won in the second.

Bithumb, which is the second largest cryptocurrency exchange in the country, reported 204.7 billion won ($152.7 million) in sales in the period, which is a drop of 66.4 percent from the first half of the previous year. Its operating profit came down to 122.9 billion won ($91.7 million), which is a year-over-year decline of 77 percent.

“The declines in sales and operating profit were caused by the shrinking digital asset market amid global monetary tightening,” said an anonymous Dunamu official to the local publication, The Korea Times.

“The drop in net profit was due to a price fall of digital assets that we secured ― such as Bitcoin.”

Struggling Prices and Global Policies

Indeed, the cryptocurrency market suffered heavily from the struggling Bitcoin and altcoin prices from their peak. The ongoing 'crypto winter' also exposed the vulnerabilities of several crypto companies, especially the crypto lending companies.

Now with the aggressive interest rate hikes by the US Federal Reserve and global monetary authorities, the earnings outlook for the rest of the year of the South Korean cryptocurrency industry remains murky.

“Most exchanges will continue to report dismal earnings performances until the Fed tones down its hawkish stance and shows gestures to slow down the pace of monetary tightening,” an anonymous industry source told the local publication.