Author: Korea Economic Daily

Translation: Deep Tide TechFlow

Deep Tide Insight: The sharp decline in the Korean stock market has triggered large-scale forced liquidations, resulting in significant losses for retail investors who borrowed money to trade stocks. In sharp contrast to the stock market, the trading volume on the cryptocurrency exchange Upbit surged over 14 times during the same period, indicating that funds are moving from the traditional market to the crypto market.

"Even the money to average down is gone"… Retail investors who borrowed to trade stocks collapse after losing 400 billion won

Although the Korea Composite Stock Price Index (KOSPI) has surpassed the "9000 point" mark and repeatedly set new historical highs, concerns about "borrowing money to trade stocks" are exacerbating both inside and outside the market. The scale of margin trading and overdraft loans continues to expand.

With the recent sharp correction in the stock market, leveraged retail investors have suffered heavy losses. On the 14th, the total amount of forced liquidations reached 400 billion won (about 286 million USD), setting a recent new high.

Meanwhile, the trading volume on the cryptocurrency exchange Upbit has seen an astonishing increase, soaring 1426% compared to normal levels, indicating that investors are seeking alternative investment channels outside of the stock market.

The Nightmare of Leveraged Retail Investors

"Buying Samsung Electronics and SK Hynix is guaranteed to make money"—during the bull market, a large number of retail investors emerged, borrowing money to invest everything. But as the market suddenly turned, these high-leverage investors became the biggest victims.

Many investors stated: "We intended to average down, but we can't even access the money to do so." The losses from forced liquidations are irretrievable.

Funds Flowing to the Crypto Market

Interestingly, while the stock market is experiencing a wave of forced liquidations, the trading volume on Korea's largest cryptocurrency exchange Upbit has exploded. Data shows that trading volume surged 1426% compared to daily levels, indicating that a large amount of capital is flowing from the traditional stock market to the cryptocurrency market.

This phenomenon reflects that, under the pressure of a downturn in the high stock market, some investors are choosing to shift to the more volatile but highly liquid cryptocurrency market.