Why Is Bitcoin Dropping? South Korea’s Record KOSPI Rally Shows Where Crypto Capital Is Going

Bitcoin has lost 45% of its value since October, currently trading at $68,617. The Crypto Fear & Greed Index dropped to 5 this month, its lowest reading ever recorded. Meanwhile, South Korea’s stock market just hit a new all-time high.

The KOSPI index broke past 6,000 this week, now up nearly 175% over the past year. That makes it one of the strongest rallies among major global markets right now. And it is being fueled largely by one sector: semiconductors.

Samsung, SK Hynix Behind South Korea’s Stock Market Rally

Chipmakers Samsung Electronics and SK hynix carry massive weight inside the KOSPI. When semiconductor earnings expectations rise, the entire market moves higher.

South Korea’s early February data backs this up. Daily average exports surged +47% year-over-year, even with fewer working days due to the Lunar New Year holiday. Semiconductor exports alone jumped +134% YoY, making up more than a third of total shipments.

Since semiconductor exports directly drive revenues for Korea’s largest listed companies, rising global AI demand is quickly translating into higher earnings expectations across the stock market.

Korean Retail Investors Are Moving From Crypto to AI Stocks

South Korea has historically been one of the most retail-driven crypto markets in the world. During bull markets, local demand often gets so strong that Bitcoin trades at higher prices on Korean exchanges compared to global markets. This price gap is known as the Kimchi Premium, and it has long been viewed as a sign of aggressive retail money entering crypto.

That premium has now compressed significantly.

Since the October crash, retail capital that previously flowed into crypto appears to be shifting toward domestic equities, particularly AI and semiconductor stocks tied to the global AI investment boom.

The retail money in Korea hasn’t disappeared. It may simply be chasing AI instead of crypto.

South Korea Proposes Disclosure Rules for Crypto Influencers

On the regulatory side, South Korean lawmaker Kim Seung-won introduced a proposal that would require crypto influencers to publicly reveal their holdings and any compensation received for promoting projects. Violations would carry penalties on par with market manipulation and unfair trading practices.

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South Korea’s stock market is breaking records. Bitcoin is still trying to recover from its worst drawdown since 2022. And the retail capital that once powered the Kimchi Premium is fueling a very different rally in 2026.

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