"Uncertainty in Won Value Drives Bitcoin Investment: Crypto Market Cap Surpasses 100 Trillion Won"

# Growing National Debt and Fiscal Deficit Cast Doubts on South Korea's Financial Stability South Korea is battling increasing national debt and a widening fiscal deficit, compounded by an aging population and deep-rooted structural issues. These challenges hint at a potential fiscal collapse, prompting citizens to explore alternative investments like U.S. equities and cryptocurrencies. Consequently, South Koreans have accumulated over 100 trillion won in cryptocurrency holdings. ## Cryptocurrencies Rise as a Tax-Free Safe Harbor The shift towards private investments is driven by a growing disenchantment with the South Korean won and the domestic economy. Real estate investments, heavily taxed, stand in stark contrast to the tax-free benefits of cryptocurrencies such as Bitcoin (BTC). Until 2026, cryptocurrencies in South Korea remain exempt from capital gains taxes, offering a significant advantage over real estate, which is subject to acquisition, property, and inheritance taxes. Moreover, South Koreans are alarmed by the persistent fiscal deficit. In 2024, the national revenue totaled 594.5 trillion won, while expenditures soared to 638 trillion won, resulting in a 43.5 trillion won deficit under integrated fiscal measures. The "managed fiscal balance," excluding social security fund surpluses, reveals a grimmer deficit exceeding 104.8 trillion won. This equates to a household earning 100 million won annually, spending 118 million won, thus facing an 18 million won deficit every year. ## Long-Term Structural Challenges Threaten Fiscal Stability The rising interest in U.S. equities and cryptocurrencies is largely fueled by a dark outlook for the South Korean won. The aging population and consistently low birth rates saddle the government with overwhelming fiscal challenges, making financial collapse seem inevitable without radical policy changes. With over 20% of the population aged 65 and above, South Korea is now classified as a "super-aged society," escalating welfare costs and further straining public finances. Healthcare expenses are another concern. Professor Hong Seok-Chul from Seoul National University warned that health insurance premiums, currently at 8%, could skyrocket to 21% by 2050, significantly increasing citizens' financial burdens. For a salary of 10 million won, this could mean monthly health-related contributions exceeding 2 million won. These factors cast a bleak future for the stability of the South Korean currency, which has been in use since 1962. ## Cryptocurrency Adoption Surges Amid Economic Worries South Koreans' shift from traditional investments to cryptocurrencies mirrors their fears of long-term fiscal instability. By the end of 2024, collective cryptocurrency holdings on the nation's five major digital asset exchanges soared to 104.1 trillion won, nearly doubling the 55.3 trillion won recorded just six months earlier. This growth is driven by persistent buying and a sharp rise in cryptocurrency valuations. Bitcoin (BTC) remains a favored hedge against inflation and currency depreciation. In 2024, Bitcoin prices surged to 160 million won in January, fueled by renewed market optimism, before stabilizing around 135 million won by year-end. Bitcoin's relative scarcity, with a total supply capped at 21 million coins, makes it particularly appealing as a long-term store of value. ## BlackRock's Record Bitcoin Purchases Indicate Confidence in Rally Highlighting bullish prospects for Bitcoin, BlackRock's iShares Bitcoin Trust (IBIT) has aggressively accumulated the cryptocurrency, securing a record 588,000 Bitcoin worth 80.8 trillion won ($55.8 billion), representing 2.8% of the total supply. Fidelity is the second-largest holder with 200,000 Bitcoin valued at 27.6 trillion won ($19 billion). Collectively, Bitcoin holdings across all 11 spot ETFs launched in early 2024 now account for 5.5% of the cryptocurrency's total supply, reinforcing its status as an institutional-grade investment. Analysts are optimistic about Bitcoin's upward trajectory, with projections of it surpassing $100,000 per coin. The U.S. government, regarded as a benchmark for institutional viability, has begun classifying Bitcoin as a strategic asset, marking a significant shift. ## Global Fiscal Challenges: A Common Currency Crisis South Korea's fiscal struggles are echoed globally. Governments from the United States to Turkey, Argentina, Brazil, and Japan have adopted expansive fiscal policies, often leading to soaring inflation. For instance, U.S. federal spending in 2021, during the COVID-19 pandemic's peak, reached $6.82 trillion, almost double its $4.05 trillion revenue, resulting in a record $2.78 trillion deficit. Although the deficit has narrowed to $1.83 trillion in 2024, the U.S. still faces systemic budgetary challenges. With inflation and devalued fiat currencies becoming global issues, investors increasingly turn to assets like gold and digital assets. Bitcoin, in particular, is seen as an inflation hedge and a reliable store of value, uncorrelated with traditional markets. ## Cryptocurrency Revolution: Shifting Investor Behavior South Koreans' embrace of cryptocurrencies, exceeding 100 trillion won in investments, highlights a shift in investor mentality. As traditional assets face risks from fiscal deficits and declining currency stability, cryptocurrencies like Bitcoin offer a compelling alternative. With both institutional and retail investors aligning with this trend, Bitcoin's rising role as a financial hedge is cemented, potentially ushering in a new era of decentralized finance.