Upbit & Bithumb 1Q24 Comparison
Korea’s Top 2 CEXs (Dunamu [Upbit] and Bithumb) disclosed their 1Q24 results on 16 May (KST).
For a comparison of 4Q24 results please refer to the following post:
1. 1Q22~1Q24 main income statement items and comments
Overall comments
- QoQ improvements for Bithumb on the surface seem flabbergasting, but 4Q23 results were “abnormal” given they implemented a zero-commission policy during this quarter.
- As such, for a direct comparison under same macro conditions, it makes sense to compare YoY results for both exchanges.
- On a YoY basis, Bithumb showed better improvements versus Upbit (i.e., YoY sales: 162% vs 67% / YoY OP: 268% vs 52% etc).
- Compared to last year’s 1Q, sales discrepancy between Korea’s number 1 (Upbit ) and number 2 (Bithumb) has narrowed down from 6x to 3.8x while OP discrepancy has become smaller from 13x to 5.4x.
> Seems like Bithumb finally managed to downsize its gap versus the leader while both recorded their best quarterly results in a while.
2. 4Q22~1Q24 quarterly main balance sheet items
Overall comments
- Despite KRW’s 4% depreciation versus dollar, both exchanges’ main balance sheet items all improved QoQ and YoY except for Bithumb’s digital asset balance (which we will mention in more details later).
- It is worth pointing out Bithumb’s cash and cash equiv. YoY growth of 171%.
Upbit
- We mentioned in last quarter’s post that Upbit started disclosing customers’ KRW fiat deposit balance in one of its footnotes. We also expected this number to increase coming into 1Q24 ( “We believe this huge amount of “dry retail powder” waiting to buy alt coins must have increased coming into 2024 as the overall macro environment has drastically improved”).
This turned out to be the case as this number increased 46% QoQ.
Bithumb
- While Upbit’s customer fiat deposit increased 46% QoQ, Bithumb saw a QoQ increase of 82%.
- The gap between both, which was 5x (so Upbit customers had 5x more KRW on the exchange), narrowed down to 4x.
- The above table shows how many and how much (in dollar terms) Bithumb and Upbit owned in the form of digital assets during the last few quarters.
Key highlights in 1Q24 especially for Bithumb:
- They offloaded 402 BTCs and 635 ETHs which is probably why their digital asset balance size decreased despite price recoveries for BTC and ETH. At the same time, this might have resulted in Bithumb’s significant cash and cash equiv. growth QoQ.
- After Bithumb sold more than 400 BTCs, BTC represents only 6% (vs Upbit’s 93%) of total digital balance and ETH’s allocation increased from 31% to 49%.
- Overall Upbit showed minimal changes in regards to their digital asset possession status.
- We expect Bithumb to add USDT pairs soon and it will be interesting to see the exchange’s USDT exposure increase after the addition.
3. Digital assets owned by Upbit and Bithumb customers
In this section we will take a closer look into digital assets owned by customers in both exchanges. It is worth pointing out that accounting-wise while Coinbase records digital assets owned by customers, current accounting standards in Korea do not coerce CEXs to record these assets at all. As such both only disclose how many and how much (at quarter end) were held by CEXs on behalf of customers so these numbers are nor recorded as assets nor liabilities. However, we might see accounting standard changes to this item as early as next year forcing both companies to book these numbers as liabilities.
Upbit
The above table shows quarterly total number and dollar-denominated value of Upbit customers’ digital assets on the exchange.
Key highlights in 1Q24 for Upbit customers:
- Despite QoQ and YoY increased XRP balance, dollar portion declined (probably due to XRP’s poor price recovery versus other majors) and for the first time in many quarters (or maybe the first quarter), XRP is no longer no.2 but no.3 after ETH.
- Dodge decreased QoQ and YoY in 1Q24 which means Korean retails on Upbit are selling and/or withdrawing to send elsewhere (we believe the former is more likely).
- BTC # continues to increase and now accounts for 28% of total in dollar size which seems like an all-time high on a quarterly basis (more Korean retails continue to buy and/or send BTC to Upbit).
Bithumb
The above table shows quarterly total number and dollar-denominated value of Bithumb customers’ digital assets on the exchange.
- As was the case with customers on Upbit, XRP’s % in dollar terms decreased significantly from peak of 22% to 10% level and now is status quo with ETH.
- Nevertheless, XRP balance increased QoQ and YoY for Bithumb retails.
- BCH balance decreased both QoQ and YoY which was probably due to Bithumb retails’ selling.
- ETH balance showed a YoY decrease. It will be interesting to see whether this decline reverses next quarter after Bithumb introduced staking beta service (while Upbit already had ETH staking on its CEX).
4. Conclusion
- Above tables show both CEXs main items in 4Q23 and 1Q24.
- You can notice the discrepancy between Upbit and Bithumb (except for CEX digital assets) has decreased versus previous quarter.
- This was probably the result of Bithumb’s zero-commission policy (in 4Q23 which significantly downsized sales and profit) which ended.
- It will be worth watching next quarter if this discrepancy continues to decrease or widens back.
Written by Eric Yoo (Co-founder of Trinito) and contributions from Jiyon Kim (Associate at Trinito).
Disclaimer
This is not investment advice and is for informational purposes only. You should not construe any such information or other materials as legal, tax, investment, financial, or other advice.
#Upbit #Dunamu #Bithumb #CEX #Korea #Cryptocurrency #BTC #ETH #XRP #CEXcomparison
