Trusted cryptocurrency stocks…Korean retail investors in U.S. stocks in tears

Korea Economic Daily

Summary

Reported that returns on cryptocurrency-related stocks heavily bought recently by Korean retail investors who invest in U.S. stocks have fallen sharply.
Major stocks such as Circle, Bitmain, and Coinbase fell 30–60%% from their peaks, widening investor losses.
An institutional investor said that volatility in these stocks is likely to increase ahead of the U.S. central bank's interest-rate decision.

Circle·Bitmain·Coinbase

Down more than 30% from the peak

Korean retail investors who recently concentrated their purchases on cryptocurrency-related stocks are seeing returns plunge. Expectations that cryptocurrency values would surge on the back of a U.S. interest-rate cut have waned.

According to the Korea Securities Depository, the stock most purchased by domestic investors over the past three months (June 4–September 3) was Circle. Net purchases during the period reached 1.068 trillion won (about $767.79 million). The second-most net purchased stock was also a crypto-related name, Bitmain ($508.74 million; about 708 billion won). Coinbase was fifth ($333.2 million; about 463.5 billion won). Of the top five net-purchased stocks, three are crypto-related, excluding the third-ranked UnitedHealth Group and the fourth-ranked iShares 0–3 Month Treasury Bond ETF.

Crypto-related stocks drew significant attention in July after the passage of the "Genius bill," which covered stablecoin issuance conditions, related reserve assets, and disclosure obligations. Weak performance in Tesla, the favorite stock among these Korean U.S.-stock retail investors, also prompted a shift in attention. The soaring prices began to reverse in mid-last month. When the U.S. July Producer Price Index (PPI) exceeded expectations, hopes for aggressive rate cuts diminished and selling pressure emerged. Circle and Bitmain have fallen 50~60% from their July highs. Coinbase is down nearly 30% over the same period.

Losses for these investors have grown. According to Mirae Asset Securities, the average return for Circle investors was -34.36% based on investment balances as of the 3rd. Bitmain (-15.39%) and Coinbase (-6.83%) also show negative returns. An institutional investor predicted, "Cryptocurrency-related stocks will show significant volatility ahead of the U.S. central bank (Fed) interest rate decision on the 16th–17th."

Ara Jo, Reporter rrang123@hankyung.com

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