Bitcoin Slump Cuts Upbit Q2 Profit by 85%

Crypto News

Bitcoin (BTC) market weakness has translated into a sharp earnings contraction at Upbit, South Korea’s largest crypto exchange, after operator Dunamu reported an 85% year-over-year decline in second-quarter operating profit. According to the half-year regulatory filing submitted to the country’s Financial Supervisory Service, operating profit fell to 23.5 billion won, approximately $17 million, from about $108 million in the same quarter a year earlier. The report also showed revenue declined 39% to 173.5 billion won, or roughly $123 million, while operating costs increased 13%, producing a far tighter margin profile. Dunamu’s profitability has moved dramatically away from its prior all-time-high margin era: in 2021, the company retained 88 won of operating profit for every 100 won of revenue, but the latest quarter left only 14 won. The filing points to trading commissions as the central pressure point. Fee income from the Upbit platform decreased 49.8% in the first half to 395.5 billion won, about $279 million, and that category represents roughly 97% of total earnings. The contraction reflects weaker activity across the broader Korean market, where five licensed won-denominated exchanges recorded a 49.5% second-quarter volume decline to $146.4 billion. Dunamu also flagged thinner liquidity in global digital asset markets and softer investor appetite, conditions that often begin with reduced demand for major crypto assets before spreading to altcoin pairs. The company said it continues to comply with the Virtual Asset User Protection Act, which has governed Korean exchanges since July 2024, and is upgrading internal systems to address unfair trading. The exchange has also been trimming its governance structure and listed assets, including the removal of three altcoins in September. Those operational steps arrive ahead of a 22% tax on crypto gains scheduled for January 2027, a policy change that could discourage a rapid rebound in retail turnover. For a business so dependent on transaction fees, the combination of lower volume, higher compliance burden and tax overhang changes the earnings math quickly.

The profit slide puts fresh pressure on the valuation accepted by strategic investors, after Samsung group affiliates, Hana Bank and Hanwha Investment Securities acquired stakes in Dunamu for roughly $1.5 billion in May. Those institutions paid 439,252 won per share, about $310, giving Dunamu an enterprise-style reference valuation near 15.3 trillion won and leaving the group collectively close to a fifth of the company. The acquisition round shows how Korean financial groups sought regulated digital-asset exposure while the retail trading cycle was still strong. With the fee base now compressed, those investors must decide whether the strategic value of Upbit’s market position justifies the earlier price. The filing did not indicate a revised swap ratio. The same per-share figure remains embedded in the pending all-stock combination with Naver Financial, even though the underlying fee business has weakened materially since the merger terms were signed in November 2025. That creates a rare gap between deal arithmetic and current performance: the transaction price has not moved, while operating cash generation has. Shareholders are expected to vote on the merger on November 19, following two schedule changes while Korea’s Fair Trade Commission reviewed the tie-up, with completion now targeted for December 31. Dunamu has attributed the deterioration to thinner liquidity across global digital asset markets and weaker investor appetite, a condition that often weighs first on majors such as Bitcoin (BTC) before reducing appetite for higher-risk altcoin trading. For institutional buyers that entered at a pre-slump price, the November vote will effectively test whether the original valuation still reflects the company’s earnings power. The filing also stressed compliance with the Virtual Asset User Protection Act and internal upgrades aimed at preventing unfair trading, including market manipulation concerns that regulators increasingly associate with automated tools such as an ai-trading-bot. Those controls may support market integrity, but they do not remove the immediate commercial problem: Upbit’s core revenue engine remains heavily exposed to trading volume, and volume has fallen sharply.

COINOTAG’s reading of the half-year filing is that Upbit’s problem is structural, not accounting-driven. The regulator submission shows commission income accounted for about 97% of Dunamu’s earnings and that the merger reference price remains 439,252 won per share despite the profit decline. That leaves Bitcoin (BTC) liquidity and Korean retail turnover as the decisive variables. A recovery would require volume to rebuild, not a one-time catalyst such as an airdrop or renewed speculation in niche segments like algorithmic-stablecoins. Until then, the November vote is the main governance test for whether institutions accept the old valuation.