Analysis: The positive correlation between the South Korean stock index and BTC price has been broken, with funds shifting from the stock market to the crypto market.
Since the beginning of this year, Asian stock markets have shown mixed results under the backdrop of a strong dollar. Some have achieved a bull market in local currency at the cost of currency depreciation, while others have sacrificed part of their stock market gains with relatively stable exchange rates. South Korea is the only exception.
In terms of Korean Won, the South Korean composite index KSOPI has fallen by 10.0% this year. Considering the depreciation of the Won, the KSOPI has dropped by 18.9% when priced in US dollars, making it the weakest in Asia. From the perspective of capital flow, since the second half of this year, only institutions in South Korea have maintained net buying in the stock market, while the household sector has continuously reduced purchases.
Analysis suggests that a significant portion of the money that South Korean residents have withdrawn from the stock market has been used for 'crypto trading.' According to the Bank of Korea (BOK), as of November, the number of domestic cryptocurrency investors in South Korea has reached 15.59 million, an increase of 610,000 from the previous month. Currently, 30% of the 51 million South Koreans are involved in crypto trading. The daily trading volume of South Korea's top five cryptocurrency exchanges—UPbit, Bithumb, Coinone, Korbit, and GOPAX—has surged from 3.4 trillion won in October to 14.9 trillion won in November, more than quadrupling. South Koreans have historically been enthusiastic about investing in cryptocurrencies. During the first wave of the cryptocurrency bull market in 2017, about 5% of the population participated; in the second round of the bull market in 2021, 10% participated; and now this proportion has expanded to 30%. However, historically, the South Korean stock index and Bitcoin prices have been positively correlated until October of this year, when this positive correlation was completely broken.
