Author: Korean Economic Daily
Compiled by: Deep Chao TechFlow
Deep Chao Insight: A deep correction in the South Korean stock market triggered massive leveraged position liquidations, causing significant losses for retail investors who borrowed to trade stocks. In stark contrast to the stock market, the trading volume on cryptocurrency exchange Upbit surged more than 14-fold during the same period, indicating a flow of capital from traditional markets to the crypto market.
"No Money Even to Average Down"... Retail Investors Who Borrowed to Trade Stocks Lose 400 Billion Won and Collapse
Despite the Korea Composite Stock Price Index (KOSPI) breaking through the "9,000-point" mark and repeatedly setting new historical highs, concerns about "borrowing to trade stocks" have been intensifying inside and outside the market. The scale of margin trading and overdraft loans continues to expand.
As the stock market recently experienced a deep correction, leveraged retail investors suffered heavy blows. On the 14th, forced liquidation amounts reached 400 billion won (approximately $286 million), setting a recent high.
At the same time, the trading volume on cryptocurrency exchange Upbit showed astonishing growth, skyrocketing 1426% compared to usual levels, indicating that investors are seeking alternative investment channels outside the stock market.
A Nightmare for Leveraged Retail Investors
"Buying Samsung Electronics and SK Hynix is guaranteed to make money"—In the bull market, a large number of retail investors emerged who borrowed money to go all in. However, as the market suddenly turned, these highly leveraged investors became the biggest victims.
Many investors stated: "I wanted to average down on the dip, but I don't even have the money to do that." The losses from forced liquidations are now irreversible.
Capital Flows into the Crypto Market
Interestingly, while the stock market faced a wave of forced liquidations, the trading volume on South Korea's largest cryptocurrency exchange, Upbit, experienced explosive growth. Data shows trading volume surged 1426% compared to daily levels, suggesting that a significant amount of capital is flowing from the traditional stock market to the cryptocurrency market.
This phenomenon reflects that, under the pressure of a high-level correction in the stock market, some investors are choosing to move to the more volatile but highly liquid cryptocurrency market.
