Summary
- Tom Lee said a South Korean stock plunge could spill into the crypto market and increase short-term selling pressure.
- He said a jump in margin calls, forced liquidations, and crypto selling tied to the domestic stock selloff could deepen broader downside pressure across the market.
- Still, he described the situation as Short term pain, suggesting the instability in the crypto market may be temporary.
Forecast Trend Report by Period
A sharp selloff in South Korean stocks, led by semiconductor shares, could spread short-term selling pressure to the crypto market, according to one market assessment.
On October 12, Fundstrat co-founder Tom Lee wrote on X that a broad decline in South Korea’s stock market was likely to spill over into crypto.
He highlighted South Korean investors’ sizable crypto holdings. If the domestic stock slump triggers margin calls and other forced liquidations in brokerage accounts, investors may seek liquidity by selling digital assets. Sales could also rise if investors offload crypto to cover stock losses or meet additional margin requirements, adding to broader downside pressure across the market.
The Kospi was down more than 4% from the previous session as of 10:16 a.m. in South Korea on October 13, falling to the 6,050 level. The drop appeared to reflect rising concern over intensifying competition in the semiconductor industry after Chinese memory-chip company ChangXin Memory Technologies, or CXMT, said it had made progress in DRAM technology development. Reports that CXMT plans to release a next-generation server product using the technology later this year also pressured semiconductor stocks in the US market overnight.
Lee did not go so far as to say the shock would lead to a prolonged downturn. Instead, he described it as “Short term pain,” suggesting the current market anxiety may prove temporary. The post also mentioned Ether.
The remarks were seen as a warning that the selloff in South Korean stocks could go beyond equities and add to volatility in the crypto market. Lee did not provide specific figures for the amount of forced liquidations or potential crypto selling.
