Bullish Bitcoin trading in Korea provides tailwinds for Kakao share price

With cryptocurrency trading reportedly reaching feverish proportions in South Korea, internet giant Cocoa could see its share price rise.

Citing comments from analysts at South Korean brokerage Mirae Asset Daewoo, the Korea Herald reports that the chat app operator is benefiting from the current craze in the bitcoin (BTC) market. According to Mirae Asset Daewoo analyst Kim Chang-kwon:

Kakao directly and indirectly owns 23% of Dunamu, the operator of Upbit. With Upbit having already surpassed its record traffic and exchange volume of the fourth quarter of 2017, we believe Cocoa will benefit.

Upbit is one of the four major cryptocurrency exchanges in South Korea, along with Bithumb, Coinone and Korbit.

In addition to its stake in Dunamu, Kakao, like other large South Korean conglomerates, also has a strong presence in the crypto and blockchain space. The chat app operator has its own cryptocurrency KLAY, as well as the blockchain platform Klaytn, which was developed by a subsidiary of Ground X.

According to Bloomberg, at the time of writing, Cocoa’s share price was 485,000 won ($429.77). Mirae Asset Daewoo raised their price target on Cocoa shares to $522.81.

In fact, the internet giant earned more than $25 million in profits from its investment in Dunama in the fourth quarter of 2017. At that time, BTC and the cryptocurrency market were in a rapid bull market that peaked in mid-December 2017. Bitcoin has almost crossed the $20,000 mark.

According to Chang-kwon, it is likely that Kakao will benefit from his $90 million investment in Dunama if a bull market for bitcoin holders is expected in 2021. The market analyst also noted that Coinbase’s listing on Nasdaq would cause a revaluation of Cocoa shares.

As previously reported by Cointelegraph, South Korea has seen a surge in cryptocurrency trading. In early March, the volume of posts on the main sites temporarily exceeded the activity of the country’s stock market.

Upbit is one of the main beneficiaries of this boom in crypto currency. Reportedly, the main financier, K Bank, is planning an IPO in 2022. The scale of the current cryptocurrency fever is so great that QBs have accelerated their profitability plan, despite significant operational disruptions in 2019 that resulted in an $89 million loss for the year.

At the same time, the country’s regulators are stepping up efforts to crack down on the cryptocurrency market amid the current boom in trading. Exchanges and other service providers have been given the power to report transactions or risks that carry a five-year prison sentence to their managers.

The cryptographic reporting directive is expected to enter into force in March. The country’s cryptocurrency companies have six months to adjust to the new regulatory paradigm.

South Korea’s tax authorities are also interested in the fast-growing crypto market and are trying to track down people who hide their assets in virtual currencies to evade taxes.

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