The currency circle finally waited for the Korean stock market to plummet

# Dong Jing

South Korean stocks have plunged roughly 20% in the past two trading days, cooling the AI tech stock speculation boom and driving rapid retail capital rotation into the crypto market. Bitcoin rose 7% in 24 hours, breaking above $73,000, with Ethereum and other major cryptocurrencies rising in tandem. While crypto trading volumes have climbed, the “Kimchi premium” indicator shows demand is only recovering moderately and has not yet reached extreme speculative levels.

A historic sell-off in South Korea’s stock market is driving the country’s active retail capital back into the cryptocurrency market, directly pushing up prices of Bitcoin and other digital assets.

Affected by rising geopolitical tensions, the tech-heavy Korea Composite Stock Price Index (Kospi) has slumped around 20% over the past two sessions. The sharp decline has ended the recent speculative frenzy centered on AI-related stocks.

As the stock market corrected sharply, capital in the South Korean market has shown rapid signs of rotation. Bitcoin gained 7% in the past 24 hours, briefly breaking above the $73,000 mark, while major cryptocurrencies including Ethereum (ETH), Solana (SOL), and XRP also posted similar gains.

Meanwhile, although crypto market trading volumes have started to rise, key data show that South Korean demand for digital assets is only recovering moderately and has not reached the extreme speculative levels seen in previous cycles.

## Stock Market Rotation Boosts Crypto Assets

Before the slump, South Korea’s stock market had just experienced a massive retail-driven rally. Over roughly 10 months starting in April 2025, the Kospi surged nearly 180%, led by heavyweights such as Samsung Electronics and SK Hynix.

South Korea is one of the few markets globally where retail investors play a dominant role in both equities and digital assets. Analysts have long observed that local traders tend to rotate capital between speculative markets rather than exiting risky assets entirely.

Analysts point out that the rapid cooling of the stock market has refocused short-term high-return-seeking capital on cryptocurrencies.

## Reversal of the “Great Korean Pivot”

A November report by digital asset media CoinDesk noted a trend known as the “Great Korean Pivot” in the South Korean market.

At that time, as retail traders poured heavily into AI-related tech stocks, trading volumes on domestic cryptocurrency exchanges fell noticeably. However, with the recent stall and reversal of the stock market rally, this trend is now changing.

In the South Korean market, when one investment segment cools, traders typically shift attention quickly to another — and the cryptocurrency market is clearly benefiting from this pattern.

## Retail Sentiment Improves but No Extreme Speculation

Although crypto trading volumes have risen on capital inflows, market activity has not yet shown the wild speculative wave seen in earlier South Korean market cycles.

A key gauge of this dynamic is the **“Kimchi premium”**, which measures the price gap between Bitcoin on South Korean exchanges and the global market. Normally, Bitcoin trades at a significant premium in the Korean won market when domestic demand surges.

According to CryptoQuant data, the current Korean premium index stands at around 1%, far below levels seen during previous retail-driven rallies. Still, given that the premium dipped into negative territory in mid-January, the latest figures signal a mild recovery in bullish sentiment among South Korean retail investors.

Analysts believe this means the South Korean stock market slump has provided incremental funding support to the crypto market. However, whether this evolves into a new large-scale speculative wave remains to be seen, depending on whether the Kimchi premium can rise further.

## Risk Warning and Disclaimer

The market is subject to risks, and investment requires caution. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial situations, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article fit their specific circumstances. Investment based on this article is at your own risk.