South Korean Retail Investors Shift from Crypto to Stocks, SK Hynix ETF Trading Volume Surpasses Top 5 Exchanges by 7x

According to data from Woofun AI, South Korea's capital markets have recently seen a significant shift in retail investor funds from cryptocurrencies to equities in pursuit of profits.

The KODEX SK Hynix Single-Stock Leveraged ETF (tracking twice the daily price movement), issued by Samsung Asset Management, recorded an average daily trading volume of 4.5383 trillion KRW (approximately USD 3.3 billion) in July. This volume exceeds the combined daily trading volume of South Korea's top five virtual asset exchanges—including Upbit—(approximately 650.3 billion KRW) by more than sevenfold.

This reversal in capital flows is primarily driven by two factors. First, the AI industry boom: SK Hynix, as a core supplier of high-bandwidth memory (HBM) to NVIDIA (NVDA-US), has become highly attractive amid the global AI surge. Second, regulatory pressure: South Korea implemented the 'Virtual Asset User Protection Act' in July 2024, significantly raising listing and disclosure requirements for exchanges, which has eroded retail investor confidence in crypto assets and redirected interest toward regulated, transparent leveraged financial products.

However, while high-leverage instruments amplify potential gains, they also carry extreme risks. As market sentiment overheated and semiconductor stocks experienced sharp volatility, many young retail investors relying on margin trading suffered severe losses.

Local media reported that a retail investor named 'Jung-ho' faced a margin call and forced liquidation on July 13, 2024—dubbed 'Black Monday' in South Korea—after SK Hynix shares plummeted and triggered a market-wide circuit breaker. Unable to repay debts, he was forced to vacate his 'jeonse' home and move into a cramped 'gosiwon' room, reportedly relying on medication to manage emotional distress.

Another investor, Jasmine, working in Hong Kong, said she was influenced by social media 'wealth creation myths' and bought at peak prices due to FOMO (fear of missing out), only to face relentless losses and being trapped in her positions. In contrast, investors who adopted conservative, non-leveraged strategies maintained relative asset stability despite market fluctuations.

In response to market volatility caused by single-stock leveraged ETFs, South Korea's Financial Services Commission (FSC) has announced regulatory measures, including raising margin requirements, accepting only cash as collateral, and banning the launch of new single-stock leveraged products. Nevertheless, the government stated it does not currently plan to forcibly delist existing products to avoid further market shock.