South Korea's stock market continues to suffer losses, while the cryptocurrency exchange Upbit shows an abnormal surge in activity. Trading volume on the platform skyrocketed by more than 1400% amid another round of decline in the KOSPI index.
On July 14, the KOSPI index fell by 4%, dropping to 6534.34 points. Shares of one of the semiconductor industry leaders, SK Hynix, lost more than 7%. This is just part of a larger trend: from its peak on June 19, the index has lost about 27.47%.
Against this backdrop, the daily trading volume on Upbit, Korea's largest crypto exchange, soared to $4.27 billion. This is 1426.2% higher than the previous day's figures. It is evident that investors are actively moving from the drained stock market into digital assets, seeking refuge or speculative opportunities.
Causes and Consequences
The collapse of KOSPI is not random. Key factors include the escalation of geopolitical tensions in the Middle East, debates over whether the semiconductor market has peaked, and a demand imbalance skewed toward individual stocks. However, a particular blow came from a wave of forced liquidations.
From July 1 to 10, the volume of forced sales reached 425.8 billion won (about $286 million). The peak occurred on July 9, when securities worth 142.2 billion won were liquidated, and on July 10, another 81.6 billion won. This refers to margin trades: when investors cannot cover a collateral shortfall, brokers forcibly close positions, increasing pressure on the market.
Mir Asset analyst Kim Seok Hwan notes that with high volatility, large leveraged positions can lead to forced closures even with a small price movement. The time gap between collateral shortfalls and the execution of sales is likely to continue fueling new volumes of liquidations.
My View
The 1426% increase in volume on Upbit is not just a statistic. It is a clear signal of a panicked capital shift and a change in sentiment. Investors are fleeing traditional assets, but not into cash—into cryptocurrency, indicating a sustained speculative appetite. However, this should not be perceived as a bullish signal for the digital asset market; rather, it is a desperate attempt to save funds amid a crisis. LS Securities analyst Jeong Da Un believes that current low valuations and a high profit base distinguish this situation from past crises, and there is no need to panic. I would add: until KOSPI finds its bottom, crypto exchanges will remain the main beneficiaries of the chaos.