The South Korean stock market suffered one of the fastest declines in its history this week, with the Kospi falling around 20% in two trading days as geopolitical tensions have, for the moment, shattered what might be called a speculative bubble in popular AI-related names.
The rapid decline follows months of aggressive buying by retail investors that sent the Kospi – dominated by Samsung and SK Hynix – soaring nearly 180% in about 10 months.
This timing has drawn attention to activity in Korean cryptocurrency markets, where trading volumes have started to increase again.
South Korea is one of the few markets where retail traders play a major role in both stocks and digital assets. Analysts have long observed that local traders often alternate between speculative markets, rather than abandoning risk assets altogether.
In November, a CoinDesk analysis described what was dubbed the “Great Korean Pivot,” noting that trading volumes on domestic crypto exchanges fell as retail traders shifted to AI-related tech stocks.
However, this rise in stocks has now stalled or reversed.
When one market cools, South Korean traders’ attention often turns to another. This perhaps benefits crypto, which has seen bitcoin rise 7% in the past 24 hours to over $73,000. Ether (ETH), solana (SOL), and XRP (XRP) are up by similar amounts.
Retail signals remain subdued
Although cryptocurrency trading volumes have increased, for now at least, activity does not yet resemble the frenzied speculative surges seen in previous Korean market cycles.
One of the key indicators is the Kimchi premium, which measures the difference between Bitcoin prices on Korean exchanges and global markets. When domestic demand increases, bitcoin often trades at a notable premium on the Korean won markets.
This premium currently remains modest, with CryptoQuant data showing the Korean Premium Index is close to 1%, well below levels seen in previous retail-related rallies. However, there was a slight increase in retailer confidence, with the Kimchi premium falling into negative territory in mid-January.
