Written by: angelilu, Foresight News
The crypto trading frenzy in South Korea has quietly seeped into the 'stock market'. The 'kimchi premium' of that year was once a global spectacle in the cryptocurrency market. This country of only 51 million people once experienced bitcoin trading volumes capable of shaking the global market. Although the government's strong regulation has rendered this premium phenomenon a thing of the past, the inherent risk-taking gene in South Koreans has not faded; it is merely looking for new outlets.
Moreover, the main forces behind this frenzy are not large institutional players in Korea, but rather young retail investors who are betting on the future. In this country of 51 million people, as many as 18 million are active in the digital asset market, accounting for more than one-third of the total population, and nearly a quarter of young people aged 20 to 39 view trading cryptocurrencies as their sole chance to turn their lives around.
BitMine is the latest trading target.
According to data from South Korea's securities custodian agency cited by Bloomberg, South Korean investors have poured a net $259 million into BitMine stock since July, making BitMine the number one stock purchased by South Koreans overseas.
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 valued at over $4.96 billion. This makes it an important 'treasury' holding ETH on Wall Street. Coincidentally, Tom Lee, who played a significant role in bringing ETH to Wall Street, is also a director at BitMine.
Tom Lee is a Korean-American. After experiencing the bloody lessons from the collapse of LUNA, South Korean investors' enthusiasm for risk assets has not waned, and at this time, the emergence of a 'fellow countryman' from overseas, who has achieved great success in the financial world, undoubtedly garners high trust and attention. For South Korean retail investors, this is not just the perspective of an industry expert, but also a call imbued with national sentiment. This subtle cultural identification further strengthens their confidence and enthusiasm for the crypto market.
Why not directly buy ETH?
A critical question arises: Since they are optimistic about Ethereum, why not directly buy ETH instead of going through a roundabout way to buy BitMine's stocks?
Volatility may be the answer. Although cryptocurrencies are famous for their extreme volatility, some retail investors may believe that participating through the stock market can provide a different risk exposure.
Backtesting shows that ETH's price rose from $2,500 to $3,800 in July, a 52% increase. During this period, BitMine's stock BMNR rose from $46 on July 1 to a peak of $135, with a maximum increase of 193%.
However, 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-loving South Koreans seem more inclined to choose investment products with more extreme volatility, even though this 'roller coaster' rise and fall can cause countless retail investors to fall from cloud nine.
However, the direct trading volume of ETH is also significant, with South Korea's largest exchange Upbit recording an ETH trading volume of $111.1 billion for the entire month of July, and net inflows are currently unquantifiable.
BitMine is merely a microcosm of the 'coin and stock' frenzy.
However, this is not the first time South Koreans have rushed into 'coin stocks'. When the stablecoin company Circle went public, it attracted the attention of South Korean investors, with net purchases reaching $450 million in the month Circle went public, driving the PE ratio of Circle up to 187 times, a figure that far exceeds any reasonable valuation of traditional fintech companies.
This fervor has also swept the domestic market in South Korea. The new government's crypto-friendly policies have filled retail investors with expectations, which is partly why the Korea Composite Stock Price Index has risen to nearly a four-year high. When the Bank of Korea announced the launch of a digital currency project (CBDC), retail investors sensed an opportunity. Companies like Kakao Pay and LG CNS, which are involved in the project, saw their stock prices rocket in a short time. Kakao Pay's stock price doubled in just one month, while LG CNS followed suit, surging nearly 70%.
When the fervor eventually subsides.
The craze for 'crypto-related stocks' in South Korea is less a financial phenomenon and more a reflection of deeper social phenomena. It illustrates how young people in South Korea are urgently seeking 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; these phenomena are usually short-lived." The valuations of 'crypto-related stocks' that have been driven up by sentiment and speculation may essentially be a massive bubble. When the fervor eventually subsides, who has been swimming naked might only be revealed at that time.
