As the cryptocurrency market in South Korea experiences a sharp decline, retail investors are turning their attention to the stock market, igniting a state-backed, AI-driven rally that has taken the place of the once-thriving altcoin scene.
For much of the past decade, South Korea was widely regarded as the epicenter of cryptocurrency speculation. The nation became synonymous with the so-called “Kimchi Premium,” a term that encapsulated the fervor with which traders pursued digital coins, often driving their prices to levels significantly higher than in other countries. However, by late 2025, that narrative has drastically changed. The same retail investors who once scoured platforms like Upbit for the next big altcoin are now focused on stocks, trading tokens for semiconductors as the crypto landscape falls silent.
A Market Gone Silent
The decline in cryptocurrency trading is stark. The once-bustling Upbit, the largest crypto exchange in South Korea, now sees trading volumes at a fraction of their previous highs. Average daily trading volumes plummeted nearly 80% from approximately $9 billion in late 2024 to about $1.8 billion by November 2025. Bithumb, the second-largest exchange in the country, has not fared better, losing more than two-thirds of its liquidity in a similar timeframe, according to reports from Wu Blockchain.
Gone are the days when municipal investing in fickle small-cap coins and rumor-filled chatrooms were evening rituals. Volatility in the market has also decreased significantly. In stark contrast to the wild swings of past years—when daily trading volumes could vary dramatically between $5 billion and $27 billion—2025's trading figures are muted, confined to a range of just $2 to $4 billion daily.
Looking back to 2018, during the height of the cryptocurrency craze, exchanges in South Korea recorded 280,000 deposits per day, according to analytics provider Dune. That number has since plummeted significantly, failing to top 50,000 daily deposits since 2021.
The Rise of a New Obsession
The vacuum left by cryptocurrency has been short-lived, as retail traders have swiftly shifted their focus to the Korean stock market. This shift has triggered one of the most remarkable rallies in the history of the KOSPI index, which surged more than 70% year-to-date, consistently reaching new highs. In October 2025 alone, the index recorded its most significant monthly increase since 2001, soaring by 21% and generating 17 new intraday records.
The rally has largely been driven by the nation's AI-linked giants, such as Samsung Electronics and SK Hynix, whose combined daily trading volumes now account for over 25% of the entire exchange. In a culture that previously entertained crypto trading as a sort of collective pastime, this shift in direction showcases the same speculative eagerness among investors, albeit with a new focus on semiconductor stocks.
Recent data from the Korea Times revealed a dramatic increase in the number of active trading accounts in South Korea, jumping from 86.57 million at the year’s outset to 95.33 million by October 31.
Retail Euphoria Spills Over into Equities
Unlike the previous meme-based rallies seen in crypto, the current stock boom is underpinned by more concrete fundamentals. AI is shaping the narrative of growth for the decade, and South Korea occupies a crucial position in that global supply chain. As major firms like Nvidia and AMD continue driving the worldwide demand for AI hardware, SK Hynix and Samsung have emerged as vital players in this arena. Their dominance over high-bandwidth memory (HBM)—an essential component for AI training—has positioned them as national heroes in the eyes of investors.
This growing enthusiasm for equity trading is also buoyed by a supportive government intent on revitalizing domestic markets. President Yoon Suk Yeol’s administration has taken steps to mitigate the long-standing “Korea Discount” by encouraging better corporate governance and policies that incentivize both retail and institutional investment.
Same Spirit, Different Casino
The speculative nature of the South Korean investing community has remained intact throughout this transition. Margin lending is on the rise, with leveraged ETFs attracting significant interest. Retail participation has doubled in a single year, according to data from Bloomberg. Notably, leveraged retail positions now account for nearly 30% of all total holdings, with younger investors leading the charge.
This implies that the shift from crypto to equities is not merely a withdrawal from the market but rather a strategic reallocation of risk. South Koreans have not ceased their speculative behavior; instead, they’ve found a new arena in which the stakes feel legitimate, and the nationalistic sentiment is palpable.
However, this shift carries ramifications for the broader cryptocurrency market. With South Korea's retail investors stepping back from crypto, key liquidity has evaporated, depriving global markets of a crucial buyer. Memecoin rallies that once captured the attention of Korean traders now fizzle out with haste. Meanwhile, the wider market is in need of a catalyst; bitcoin trades around $100,000, despite peaking just a month earlier, while several altcoins have suffered losses of over 20%.
Waiting for the Next Spark
The decline of South Korea's “Kimchi traders” in crypto markets may appear significant, but history suggests that they are unlikely to remain gone forever. Analysts speculate that as the AI hype begins to wane—potentially in the near future—or when a new compelling narrative in cryptocurrency emerges, these traders could return full force, armed with fresh capital and honed trading strategies.
For now, Korea's retail traders have exchanged their blockchains for circuit boards, chasing the same excitement in a different but equally vibrant market.
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