South Korean retail traders saw their bets on AI-related stocks soar, only to face a swift collapse that erased a quarter of their gains in under a month. The dramatic drop left many investors grappling with losses, echoing painful lessons familiar to crypto traders.
In late 2025, a mass shift occurred. Retail investors abandoned memecoins, turning their focus to semiconductor giants like SK Hynix and Samsung Electronics, companies key to the AI infrastructure boom. This pivot sparked a staggering 180% surge in the KOSPI index over roughly 10 months, fueled by heavy inflows into leveraged single-stock ETFs that tracked these tech titans.
The sudden reversal and its ripple effects
March 2026 brought a violent correction. Within two days, the market shed almost 20%, driven by profit-taking, geopolitical unrest, and mounting doubts about whether AI investments could sustain their breakneck pace. Forced liquidations in highly leveraged ETFs cascaded through the market, compounding the sell-off.
Interestingly, as equities dropped, capital started flowing back into crypto exchanges like Upbit and Bithumb, which had seen volumes dry up during the stock boom. However, despite the AI frenzy, crypto markets did not see a rise in AI-related tokens or protocols, highlighting a disconnect between where retail investors’ attention shifted and what crypto currently offers.
What stands out is that Korean investors maintained their appetite for use, simply swapping crypto’s perpetual futures for equity products with similar risk profiles. This pattern of chasing amplified returns set the stage for a steep fall once optimism faded.
This material is for informational purposes only and does not constitute financial advice.
