Author: angelilu, Foresight News
The cryptocurrency trading frenzy in South Korea has quietly spilled into the 'stock market.' The 'kimchi premium' of that year was once a phenomenon that the global cryptocurrency market talked about with great interest. This country, with a population of only 51 million, once experienced Bitcoin trading volumes that could shake the global market. Although the government's strong regulation has made this premium phenomenon a thing of the past, the adventurous spirit inherent in Koreans has not faded; they are just seeking new outlets.
Moreover, the main players in this frenzy are not large Korean institutional investors but the younger generation of retail investors betting on their 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 country's total population. Among them, nearly a quarter of young people aged 20 to 39 view trading cryptocurrencies as the only chip to turn their lives around.
BitMine is the latest trading target
According to data cited by Bloomberg from South Korea's securities custody institutions, South Korean investors have poured $259 million in net funds into BitMine stocks since July, making BitMine the top foreign stock purchase in Korea.
BitMine is a U.S. Bitcoin mining company backed by 'Silicon Valley king' Peter Thiel, which has recently transitioned from Bitcoin mining to adopting ETH as its financial strategy, now holding over 1.15 million ETH, worth over $4.96 billion. This makes it an important 'treasury' holding ETH on Wall Street. Interestingly, Tom Lee, a key player bringing ETH to Wall Street, is also a director at BitMine.
Tom Lee is a Korean American. After experiencing the brutal lesson of the LUNA coin crash, Korean investors' enthusiasm for risk assets has not waned. At this moment, the emergence of a 'fellow countryman' from abroad who has achieved great success in finance undoubtedly gains tremendous trust and attention. For Korean retail investors, this is not just the perspective of an industry expert but also a call with national sentiment. This subtle cultural identity further reinforces their confidence and enthusiasm for the crypto market.
Why not directly buy ETH?
A key question arises: Since there is optimism about Ethereum, why not directly buy ETH instead of going around and buying 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 can provide a different risk exposure.
In actual backtesting, the price of ETH rose from $2,500 to $3,800 in July, an increase of 52%. During this period, the price of BitMine stock BMNR rose from $46 on July 1 to a maximum of $135, with a maximum increase of 193%.
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-tolerant Koreans seem to prefer riskier investment varieties, even though such 'roller coaster' fluctuations can cause countless chasing retail investors to fall from cloud nine.
But in fact, the direct trading volume of ETH is not low either. In July, the ETH trading volume of Upbit, Korea's largest exchange, was $111.1 billion, and net inflow cannot be estimated at this time.
BitMine is just a microcosm of the 'crypto stock' frenzy.
However, this is not the first time Koreans have rushed into 'crypto stocks.' When the stablecoin company Circle went public, it had already attracted the attention of Korean investors, with a net purchase amount of $450 million in the month of Circle's IPO, pushing Circle's P/E ratio to 187 times, a figure that far exceeds any reasonable valuation for traditional fintech companies.
This frenzy has also swept across the domestic market in Korea. The new government's crypto-friendly policies have filled retail investors with expectations, which is also part of the reason why Korea's comprehensive stock price index has risen to a nearly 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 like Kakao Pay and LG CNS participating in the project seemed to have taken off like rockets in a short time. Kakao Pay's stock price doubled in just one month, while LG CNS also followed closely, soaring nearly 70%.
When the frenzy eventually recedes
The 'crypto-related stocks' frenzy in Korea is less a financial phenomenon and more a reflection of deep social phenomena. It reflects how young people in 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 quickly sell off their stocks. These phenomena are usually short-lived.' The valuations of 'crypto-related stocks' that are driven up by emotion and speculation may essentially be a huge bubble. When the frenzy eventually recedes, perhaps only then will the truth be revealed about who is swimming naked.
