South Korean small-cap stocks are experiencing accelerated declines as investors pivot from equities to Bitcoin-related assets. Since the U.S. election, Bitcoin has surged nearly 35%, while the KOSDAQ index, dominated by small-cap stocks, has dropped 8%, potentially becoming Asia's worst-performing index this year.
Analysts suggest that retail investors moving from stocks to Bitcoin have contributed to the KOSDAQ's downturn. Ahn Hyunsang, CEO of the Korea Investment Research Institute, noted that poor performance in the KOSDAQ market has driven people towards the token market.
Due to restrictions on domestic brokers trading overseas Bitcoin ETFs, Korean investors are increasingly turning to leveraged funds betting on Bitcoin futures or purchasing U.S. stocks like MicroStrategy (MSTR, Financial), which is often seen as a "Bitcoin proxy stock." However, concerns are rising about Bitcoin's ability to sustain its rally after facing resistance near the $100,000 mark.
Additionally, there has been a notable inflow of $18.8 million into the ProShares Short Bitcoin Strategy ETF (SBIT), a fund that offers a double inverse exposure to Bitcoin futures, marking its highest level since its launch in April.
