Author: Claude, TechFlow Shenchao
Deep Tide TechFlow Introduction: The Korean KOSPI index triggered the circuit breaker mechanism again on July 13. Samsung Electronics and SK Hynix plunged over 7% and 12% respectively, with the index having retracted more than 20% cumulatively from its June 19 peak. Retail investors are starting to vote with their feet: according to Coingecko data, the 24-hour trading volume on Upbit, South Korea's largest exchange, surged to $4.12 billion, a single-day increase of 436%. The top five cryptocurrencies by trading volume were BTC, XRP, ETH, T, and BLAST.
Nearly a week of consecutive stock market plunges in South Korea is driving retail funds towards the cryptocurrency market.
On July 13, the KOSPI index opened down 63.91 points to 7,412.03. Losses continued to widen during the session. At 10:34 AM, KOSPI 200 futures fell more than 5%, triggering this year's 18th sidecar (seller temporary halt). When triggered, KOSPI was at 7,162.21, down 4.20% from the previous trading day.
Samsung Electronics fell over 7.72% on the day, while SK Hynix plunged more than 12%. SK Square (the largest shareholder of SK Hynix) dropped 15%, and Samsung Electro-Mechanics fell 17%.
KOSPI Retraces Over 20% from Peak, Semiconductor Supercycle Faces Trust Crisis
The KOSPI has entered a technical correction from its June 19 intraday high of 9,385 points, with a cumulative retracement exceeding 20%.
The volatility of the Korean exchange in 2026 has already surpassed that of the 2008 financial crisis. Up to that point, the Korean exchange had triggered nearly 30 sidecars and multiple circuit breakers this year, breaking the historical record of 26 sidecars for the entire year of 2008.
Samsung Electronics and SK Hynix together account for about half of KOSPI's market capitalization, essentially determining the index's direction of movement. eToro market analyst Zavier Wong previously pointed out that these two stocks had a weighting of about a quarter in the index at the end of last year, which has now risen to about half. Any significant fluctuation in either stock drags down the entire index before the remaining nine hundred-plus listed companies have time to react.
SK Hynix 'Sell the News' Combined with Profit Expectation Downgrade Drags Down Entire Semiconductor Sector
SK Hynix just listed ADRs on the Nasdaq on July 10, surging 12.8% on its first trading day, raising approximately $26 billion for the company. However, just three days later in the Seoul market, the stock experienced a classic 'buy the rumor, sell the news' correction.
Korea Investment & Securities analyst Chae Min-suk released a report on July 13, forecasting SK Hynix's second-quarter operating profit at 60.4 trillion won, about 8% lower than the market consensus of 65 trillion won. She explained that SK Hynix's sales proportion of HBM (High Bandwidth Memory, a high-speed storage technology core to AI chip support) is higher than its competitors, leading to slower growth in its average selling price compared to the industry average.
This expectation downgrade is particularly damaging in the current environment. Daishin Securities analyst Lee Kyung-min noted that due to excessive concentration in semiconductors, leveraged investment liquidation, and supply-demand shocks, KOSPI's forward P/E ratio has fallen to levels seen during the 2008 global financial crisis. However, he also mentioned that current valuations have entered undervalued territory, and even a slight positive catalyst could trigger a rapid rebound.
But the market has other, more cautious voices. KOSPI's 'Buffett Indicator' (market capitalization to GDP ratio) reached 221% in June, far above the 70.2% average between 2000 and 2025, suggesting there is still room for valuation adjustments.
Upbit Trading Volume Soars 436%, Funds Flow Back from Stocks to Crypto Market
According to Coingecko data, Upbit's 24-hour trading volume reached $4.12 billion, a 436% increase. The top five cryptocurrencies by trading volume were: Bitcoin, XRP, ETH, T (Threshold Network), and BLAST.
Korean retail investors migrating funds from stocks to crypto is not new. This round of flow-back follows a highly consistent script with several previous rounds of KOSPI plunges. During the KOSPI decline in May, XRP had already become the highest-traded crypto asset on Upbit and Bithumb, with daily trading volume surpassing Bitcoin and Ethereum.
Tiger Research analyst Ryan Yoon attributes this phenomenon to the group of Korean retail investors aged 40 to 50, who are withdrawing funds from domestic Korean stocks and U.S. stocks and transferring them into the crypto market, with XRP being the preferred target.
Prior to this surge in trading volume, the Korean crypto market actually experienced five consecutive weeks of shrinking volume. From July 3 to 10, the combined trading volume of South Korea's five major won-based exchanges (Upbit, Bithumb, Coinone, Korbit, Gopax) was 9.9676 trillion won, a 25.75% decrease from the previous week, falling below 10 trillion won for the first time since September 2023.
The trading volume explosion on July 13 can be seen as a concentrated release after this period of accumulation. Looking at the trading pairs, the appearance of Threshold (T) and BLAST in the top five reflects Korean retail investors' habitual preference for speculating in mid- and small-cap altcoins. According to Bitcoin Sistemi data, T's 24-hour trading volume on Upbit reached $68.27 million, with its total trading volume on Korean exchanges approximately $76.75 million.
The See-Saw Effect Between Korean Stocks and Crypto: A Continuously Validated Trading Logic
South Korea is one of the few global markets where retail funds switch between the stock market and the crypto market on a large scale. To date, over 16.2 million people in South Korea own crypto accounts, accounting for about 32% of the population. The number of crypto holders has surpassed the number of stock investors. According to Chainalysis data, South Korea has cumulatively received over $722 billion in crypto asset value, making it the world's second-largest recipient of crypto assets after the United States.
Public data shows that from July 13 to 19, stablecoin trading volume on South Korea's five major exchanges reached 2.226 trillion won (approximately $1.62 billion). Korean investors' high trading enthusiasm had already begun to show when they frantically bought XRP on July 11.
Following previous patterns, Korean retail investors' aggressive crypto buying typically concentrates within 1 to 3 trading days after a KOSPI plunge, after which trading enthusiasm gradually subsides as the stock market stabilizes. What investors need to watch is: if KOSPI finds support at current levels, the 'spillover effect' funds in the crypto market may retreat just as quickly.
