This week, shares of two major South Korean chipmakers created a real storm for investors, and crypto traders were watching closely. Shares of Samsung and SK Hynix fell more than 10% on Tuesday, dragging the Kospi index to its lowest level in three months. Just a day later, SK Hynix reported a staggering 1242% increase in quarterly profit.
This series caught the attention of Bitcoin ($BTC) traders, as shares of South Korean semiconductor companies are now seen as an early indicator of broader market sentiment.
Sharp sell-offs in Seoul often impact U.S. tech stocks ahead of the Wall Street opening, and for much of last year, $BTC traded in unison with AI-related stocks, not just under the influence of crypto-specific news. When companies like Samsung and SK Hynix face a setback, many crypto firms view it as a signal of impending trouble for risk assets.
Why Crypto Exchanges Watch Seoul Before New York Opens
These relationships have strengthened and gained a reputation among market experts. According to Business Insider, a rapid sell-off of Kospi stocks influences stocks in the U.S. market at the opening of Wall Street trading.
Tuesday's events were a vivid example of this. The leaders of the decline were Samsung and SK Hynix, which account for a significant portion of the Kospi's market capitalization. Shares of SK Hynix, listed on a U.S. exchange, subsequently fell about 9%, and the Nasdaq 100 index dropped nearly 2%.
Although neither of these two corporations has any direct connection to cryptocurrencies, they are nevertheless at the center of the booming AI infrastructure development. When investors change their minds about AI, they often also reduce their exposure to other risky assets.
Bloomberg recently reported that the recent drop in the price of $BTC has also led to losses for companies that have accumulated significant $BTC reserves, further confirming the close connection between cryptocurrencies and broader market sentiment.
The 1242% Profit Growth That Stocks Ignored
SK Hynix's profit caused an even stronger market reaction. The company reported a net profit for the second quarter of 94 trillion won, setting a record quarterly profit. Operating profit rose 557% to 60 trillion won on revenue of 79 trillion won, although this profit figure was significantly inflated by a one-time gain from the sale of a 10% stake in flash memory maker Kioxia.
Nevertheless, despite the impressive figures, investors continued to sell off their shares. The price of SK Hynix shares fell by 14% even before the financial results announcement. Shares of Samsung and SK Hynix have lost approximately 33% and 41%, respectively, over the past month.
Samsung, which will release its financial report on Thursday, expects second-quarter operating profit to grow by 1800% compared to the same period last year.
This discrepancy is important for Bitcoin investors. If stock prices fall even on strong profits, it could mean investors are starting to focus on future risks rather than current performance.
What is the Real Reason for the Sell-off?
The pressure is believed to be more driven by growing uncertainty about the pace of AI investments rather than a drop in demand for memory chips.
As reported by The Guardian, investors are concerned about the huge borrowing required to finance new AI data centers. Meanwhile, China's semiconductor industry is steadily developing.
According to The Information, Chinese manufacturers have begun mass production of domestic deep ultraviolet lithography equipment, and the entry of memory maker CXMT in Shanghai increased sales by 466%, heightening fears about future competition.
Investors are also sounding the alarm about the sustainability of AI investments. News that Nvidia is working on a $250 billion data center in Ohio does not help the situation, as it revives concerns that the industry may be funding itself. According to JPMorgan's Executive Director, Joshua Myers:
"None of these reasons seems to be fundamental."
This is important for cryptocurrencies because sentiment-driven sell-offs often spill over to other markets. When investors rush to eliminate risk, Bitcoin gets lost in the wave of other sell-offs.
What is the Signal Value From Here?
The situation is mixed, with no clear positive or negative points. According to forecasts by KB Securities analyst Kim Dong-won, memory chip prices will rise by at least 30% in the third quarter due to potential supply constraints that could last until 2028. Furthermore, SK Group reported on a joint $500 billion project with Nvidia, raising expectations for continuous and active investments in the AI sphere.
If investor interest in Korean chipmaker stocks stabilizes, many will perceive it as a return of risk appetite. Samsung will face its first test this week when it releases its financial report.
Other tech giants, such as Microsoft, Meta Platforms, and Amazon, will release their quarterly results thereafter, which are likely to clarify whether this week's decline was merely a temporary dip in sentiment or if it marks the beginning of significant market changes that could also affect Bitcoin's further movement.
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