South Korean retail investors shift to AI chip stocks: the capital migration behind the 80% plunge in crypto trading volume

On November 10, 2025, South Korea’s cryptocurrency market experienced a historic turning point. The domestic exchanges’ daily trading volume plummeted by 80% from its 2024 peak, while during the same period, South Korea’s composite stock index (KOSPI) surged by 70%, driven by AI chip giants Samsung Electronics and SK Hynix. This capital migration led to a surge in active securities trading accounts in Korea to 95.33 million, a 10% increase from 2024, whereas the number of daily cryptocurrency deposit addresses shrank from 280,000 in 2018 to less than 50,000. This shift in investment preferences reflects a global capital flow moving from virtual assets to key sectors of the real economy, with Korean retail investors’ patriotic investment sentiment resonating uniquely with the AI revolution.

Specific Manifestations of Cryptocurrency Market Contraction

The collapse in domestic trading volume exemplifies industry decline. South Korea’s once top-five global exchange saw its average daily trading volume drop sharply from a peak of $9 billion at the end of 2024 to $1.8 billion currently, an 80% decline. More notably, market share is being eroded by traditional brokerages—online trading volumes of Shinhan Financial Investment and Samsung Securities increased by 230% during the same period—indicating a systematic withdrawal of funds from the crypto sector.

The “Kimchi premium” phenomenon has nearly disappeared. In 2024, Bitcoin’s premium rate on Korean exchanges often reached 3-5%, but now it has fallen below 0.2%. This structural change signals a significant cooling of Korean investors’ enthusiasm for cryptocurrencies. Chainalysis data shows Korea’s share of global crypto trading dropped from 8.5% in 2024 to 2.1%, losing its position as the fifth-largest crypto market worldwide.

Liquidity in derivatives markets is also drying up. The open interest in Bitcoin perpetual contracts on the largest domestic CEX fell from $4.5 billion to $900 million, with futures trading volume decreasing by 85%. This liquidity contraction has led to insufficient market depth, with bid-ask spreads for large orders expanding to three times last year’s levels, further discouraging institutional participation.

Drivers of Stock Market Prosperity and Technological Revolution

Demand for AI chips has ignited the semiconductor sector. Samsung Electronics’ stock price increased by 120% cumulatively in 2025, while SK Hynix rose by 150%, together accounting for 35% of the KOSPI index weight. This explosive growth stems from breakthroughs in high-bandwidth memory (HBM) technology—Samsung’s HBM3E products achieved an 85% yield rate, and SK Hynix secured a $5 billion long-term supply contract with NVIDIA.

Retail investor behavior is becoming more leveraged. Data from Korea Securities Depository shows margin account sizes grew by 180% in 2025 to a record high of $45 billion. Meanwhile, daily trading volume of leveraged ETFs surged by 300%, with ETFs tracking semiconductor indices being the most favored. This leveraged investment pattern is eerily similar to the 2017 crypto bull market, but the capital flow is now directed elsewhere.

The momentum of patriotic investment sentiment is strengthening. Korean retail investors view the semiconductor industry as a core national strength, with social media topics like “chip powerhouse” exceeding 5 billion views. This nationalist sentiment resonates with financial return expectations, prompting household assets to tilt toward equities. A report from the Bank of Korea indicates that the proportion of stocks in household financial assets rose from 21% in 2024 to 28%, reaching a historic high.

Global Capital Flows and Market Impact

Korean capital withdrawal is intensifying the divergence in the crypto market. Assets favored by Korean investors, such as Cardano and Polkadot, declined by over 40% in 2025, while Bitcoin remained relatively resilient due to institutional support. This structural shift has reduced global cryptocurrency market volatility from 85% in 2024 to 55% currently, indicating increased market maturity.

The clustering effect of the semiconductor industry is reshaping Asia’s landscape. Korea’s leading position in AI chips has attracted global capital inflows—foreign net purchases of Korean stocks reached $32 billion in 2025, three times higher than 2024. This capital movement has made the Korean won one of Asia’s best-performing currencies and accelerated semiconductor investments in Japan and Taiwan.

The distribution of global liquidity has undergone a fundamental change. Korea’s case demonstrates that when technological innovation offers sufficiently attractive returns, capital can fully flow back from the virtual economy to the real economy. This paradigm shift poses a serious challenge to the long-term development of the crypto market—proof that it can not only store value but also generate tangible productivity is essential.

Investment Strategies and Risk Warnings

Recommendations based on industry trends: Focus on leading HBM technology companies and AI chip design firms within the semiconductor sector, with a suggested allocation of up to 30% of stock holdings. Maintain a 10% crypto position as a diversification tool, primarily in Bitcoin and Ethereum.

Risk management should be vigilant against valuation bubbles. The average P/E ratio of Korea’s semiconductor sector is currently around 35, nearing historical peaks. Implement a dynamic 15% take-profit threshold and consider phased reductions. Be especially alert to signals of a peak in the global AI investment cycle, such as NVIDIA’s earnings falling short of expectations or a slowdown in cloud computing capital expenditure.

Long-term structural opportunities remain. Despite short-term capital outflows, blockchain applications in asset tokenization and supply chain finance continue to accelerate. It is advisable to monitor crypto projects deeply integrated with traditional industries, as these assets may lead market recovery in the next cycle.

Conclusion

The migration of Korean investors from cryptocurrencies to AI chip stocks marks a broader re-evaluation of the value balance between digital assets and the real economy by global capital. This capital flow is not merely a shift in market preference but a realignment of technological innovation pathways. As the AI revolution accelerates, the crypto industry must demonstrate its technological practicality and economic value to secure a long-term position in this unprecedented capital competition. For global investors, understanding the deeper logic behind this capital migration is more important than chasing short-term market fluctuations.