Bank of Korea Rate Hike Targets Inflation and Crypto Speculation

The decision follows a period of cooling speculative activity within the domestic market. Data shows that cryptocurrency holdings among South Korean investors fell sharply from $83.3 billion in January 2025 to $41.4 billion by February 2026. Daily trading volumes across major exchanges like Upbit and Bithumb have mirrored this decline, dropping from $11.6 billion in December 2024 to approximately $3 billion in February.

Governor Hyun Song Shin indicated that the central bank remains prepared for further tightening, citing strong economic growth and inflation that reached 3.2% in June. As borrowing costs rise, households may shift capital from volatile digital assets toward traditional yield-bearing instruments like bonds and bank deposits. While global liquidity and institutional flows remain significant factors, the domestic shift toward a 3.00% benchmark rate could cement a period of reduced liquidity for Korean retail traders.