Breaking news, South Korea's KOSPI index plummeted 8.3% intraday, triggering a circuit breaker, with trading paused for 20 minutes. The KOSDAQ startup board also triggered a Sidecar circuit breaker simultaneously, pausing algorithmic trading for 5 minutes. This is the most severe single-day decline in the Korean stock market since June. SK Hynix fell over 11%, Samsung Electronics dropped more than 8%, and Hyundai Motor and Kia declined over 11% and 8%, respectively. Foreign investors sold over $1.3 billion net in a single day, with the total outflow in June far exceeding any month this year.

The core reason for the plunge is the previous extreme surge in AI chip market prices. SK Hynix just surpassed Samsung on Monday to become Korea’s largest market cap, with valuation bubbles combined with high-leverage semiconductor ETFs amplifying volatility. South Korea’s top financial regulator publicly criticized leveraged ETFs tracking a single semiconductor leader, stating they “only cause investors to lose money and serve no other purpose,” and is preparing market stabilization measures.

As one of the top three cryptocurrency trading markets globally, the circuit breaker-level crash of the KOSPI directly caused retail investors’ risk appetite to sharply contract.

The linkage between crypto assets and Asian risk assets shows obvious selling pressure, with all markets under pressure.

Meanwhile, on-chain data shows that whales with over 7 years of holdings continue to sell at a rate of about 1,000 coins per hour. While this is a routine profit-taking, it resonates with the selling pressure from Korean retail investors.

Uncertainty lies in the strength of regulatory stabilization measures! If South Korea restricts leveraged ETFs or implements short-selling bans, a quick stabilization may occur. If the market is allowed to free-fall, panic could spread to Japan and beyond. Additionally, today’s Asian sell-off happened before the US stock market opened; if US stocks decline along with Asian markets, the selling pressure in crypto markets will further intensify.

Typically, circuit breaker events in Korea lead to short-term oversold conditions but do not change the medium-term trend. For now, it’s advisable to stay on the sidelines, awaiting regulatory signals and US market opening performance.