Author: angelilu, Foresight News
Korea's crypto trading frenzy has quietly surged into the 'stock market.' The 'kimchi premium' of previous years was once a spectacle that the global cryptocurrency market talked about enthusiastically. This country with only 51 million people has witnessed Bitcoin trading volumes capable of shaking the global market. Although the government's strong regulation has made this premium phenomenon a thing of the past, the inherent adventurous spirit of Koreans has not faded; they are merely searching for new outlets.
Moreover, the main force behind this frenzy is not the large Korean institutional giants, but the younger generation of retail investors betting on the future. In this country with a population of 51 million, as many as 18 million people are active in the digital asset market, accounting for more than one-third of the total population, among which nearly a quarter of young people aged 20 to 39 view trading coins as the only leverage to turn their lives around.
BitMine is the latest trading target.
According to Bloomberg citing data from Korea's securities custody agency, since July, Korean investors have poured a net amount of $259 million into BitMine stocks, placing BitMine at the top of the list for overseas stock purchases in Korea.
BitMine is a U.S. Bitcoin mining company supported by 'Silicon Valley King' Peter Thiel, which has recently transitioned from Bitcoin mining to adopting ETH as its financial strategy, currently holding over 1.15 million ETH, worth over $4.96 billion. This makes it an important 'treasury' on Wall Street that holds ETH. Interestingly, Tom Lee, a key figure in bringing ETH to Wall Street, is also a director at BitMine.
Tom Lee is a Korean American. After the bloody lesson of the LUNA coin crash, Korean investors' enthusiasm for risk assets has not waned. At this time, the emergence of a 'fellow countryman' from abroad who has achieved great success in the financial world undoubtedly gained high trust and attention. For Korean retail investors, this is not just the perspective of an industry expert but also a rallying call with national sentiment. This subtle cultural identity further reinforces their confidence and enthusiasm for the crypto market.
Why not buy ETH directly?
A key question arises: Since Ethereum is promising, why not buy ETH directly instead of going through a long route to purchase BitMine's stock?
Volatility may be the answer. Although cryptocurrencies are known for their extreme volatility, some retail investors may believe that participating through the stock market provides a different risk exposure.
From backtesting, the price of ETH rose from $2,500 in July to $3,800, an increase of 52%. During this period, BitMine stock BMNR rose from $46 on July 1 to a peak of $135, with a maximum increase of 193%.
But as of the time of writing, ETH has risen to $4,300, the highest level since December 2021. Meanwhile, the price of BMNR has only slightly rebounded to $58.98. Risk-seeking Koreans seem more inclined to choose investment varieties with higher volatility, even though this 'roller coaster' rise and fall can cause countless chasing retail investors to fall from the clouds.
However, the direct trading volume of ETH is not low either, with just Korea's largest exchange Upbit reporting an ETH trading volume of $111.1 billion for the entire month of July, and net inflows are currently unquantifiable.
BitMine is just a microcosm of the 'coin stock' frenzy.
However, this is not the first time Koreans have rushed into 'coin stocks.' When the stablecoin company Circle went public, it already attracted the attention of Korean investors, with a net buying amount of 450 million dollars in the month of Circle's IPO, pushing Circle's price-to-earnings ratio to 187 times, a figure far exceeding any reasonable valuation for traditional fintech companies.
This frenzy has also swept the Korean domestic market. The new government's crypto-friendly policies in Korea have given retail investors high hopes, which is also part of the reason for pushing Korea's composite stock price index to nearly a four-year high. When the Bank of Korea announced the launch of a digital currency project (CBDC), retail investors smelled opportunity. The stock prices of companies participating in the project, such as Kakao Pay and LG CNS, seemed to have shot up like rockets in a short time. Kakao Pay's stock price doubled in just one month, while LG CNS followed closely behind, soaring nearly 70%.
When the frenzy eventually subsides
The craze for 'crypto-related stocks' in Korea is more a reflection of deep social phenomena than a financial phenomenon. It reflects how young Koreans eagerly seek non-traditional, high-risk breakthrough paths in an environment where traditional wealth accumulation channels are increasingly narrow.
As Dragonfly's Hadick warned: 'When the premium disappears, investors will quickly sell their stocks, and these phenomena are usually temporary.' The valuations of 'crypto-related stocks' that are driven up by emotions and speculation may essentially be a huge bubble. When the frenzy ultimately subsides, it may only then be clear who is swimming naked.
