The cryptocurrency trading fever in South Korea has quietly surged into the 'stock market'. The 'Kimchi Premium' was once a global cryptocurrency market spectacle. This country with only 51 million people once generated Bitcoin trading volumes that could shake the global market. Although government's strong regulation has made this premium a thing of the past, the adventurous gene of Koreans has not diminished, but is seeking a new outlet.
And the main force of this craze is not Korean institutional giants, but young 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 total population. Among them, nearly a quarter of young people aged 20 to 39 view crypto trading as their only chip to turn their lives around.
BitMine is the Latest Trading Target
According to Bloomberg citing data from Korean securities custody institutions, Korean investors have injected $259 million in net funds into BitMine stock since July, pushing BitMine to the top of the Korean overseas stock purchase list.
BitMine is a US Bitcoin mining company supported by 'Silicon Valley King' Peter Thiel, which has recently transitioned from Bitcoin mining to adopting ETH as its financial strategy. It now holds over 1.15 million ETH, valued at over $4.96 billion, making it an important 'vault' holding ETH on Wall Street. Interestingly, Tom Lee, a key figure in bringing ETH to Wall Street, is also a board member of BitMine.
Tom Lee is a Korean-American. After experiencing the bloody lesson of the LUNA coin crash, Korean investors' enthusiasm for risky assets has not diminished. The appearance of an 'insider' who has achieved great success in the financial world overseas naturally gained extremely high trust and attention. For Korean retail investors, this is not just an industry expert's perspective, but a call with ethnic emotional resonance. This subtle cultural identity further strengthened their confidence and passion for the crypto market.
Why Not Directly Buy ETH?
A key question emerges: If bullish on Ethereum, why not directly buy ETH, but instead go around to buy BitMine stock?
Volatility might 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, ETH's price rose from $2,500 to $3,800 in July, a 52% increase. During the same period, BitMine stock BMNR's price rose from $46 on July 1st to a high of $135, with a maximum increase of 193%.
However, by the time of writing, ETH has risen to $4,300, its highest level since December 2021. BMNR's price has only slightly recovered to $58.98. High-risk-appetite Korean investors seem to prefer more volatile investment products, although this 'roller coaster' rise and fall can make countless chasing investors fall from the heights.
In fact, ETH's direct trading volume is not low. Upbit, Korea's largest exchange, had an ETH trading volume of $111.1 billion in July, with net inflow yet to be calculated.
BitMine is Just a Microcosm of the 'Crypto Stock' Craze
However, this is not the first time Koreans have rushed towards 'crypto stocks'. When the stablecoin company Circle went public, it already attracted Korean investors' attention. In the month of its listing, they net bought $450 million, driving Circle's price-to-earnings ratio to 187 times, far exceeding any reasonable valuation for a traditional fintech company.
This frenzy has also swept through the Korean domestic market. The crypto-friendly policies of the new Korean government have filled retail investors with anticipation, which is also part of the reason the Korean composite stock index has risen to a near four-year high. When the Korean central bank announced the launch of a digital currency project (CBDC), retail investors sensed an opportunity. Companies involved in the project like Kakao Pay and LG CNS seemed to ride a rocket. Kakao Pay's stock price doubled in just a month, while LG CNS followed closely, surging nearly 70%.
When the Fever Finally Subsides
The Korean 'crypto-related stock' fever is less a financial phenomenon and more a manifestation of a deeper social phenomenon. It reflects how young Koreans are eagerly seeking non-traditional, high-risk breakthrough paths in an environment where traditional wealth accumulation channels are increasingly narrow.
As Dragonfly's Hadick warns: "When the premium disappears, investors will quickly sell stocks, and these phenomena are usually short-lived." Those stock valuations pushed up by emotion and speculation may essentially be a massive bubble. When the fever finally subsides, who has been swimming naked may only then become clear.
