South Korea’s Stock Market Fell 6% in a Day and Tom Lee Says Ethereum Will Feel It. How Does a Korean Stock Crash Reach Crypto?

On October 13, 2026, South Korea’s main stock index, the KOSPI, fell sharply by 6.1%, dropping to 5,996 points by 10:40 a.m. Seoul time. This decline erased 388 points in just a few hours. Shortly after, Tom Lee, chairman of BitMine, cautioned that this South Korean stock crash could impact Ethereum (CRYPTO: ETH).

Lee wrote on X, “This major decline in Korean equities is likely spilling over into crypto – margin liquidations in brokerage – Koreans are major holders of crypto. Short-term pain $ETH.” While he outlined a potential connection between stock market losses and crypto, he didn’t specify any figures. So how could a downturn in Seoul’s stock market lead to Ether sales, and does the evidence support this theory?

Memory-Chip Stocks and Foreign Sellers Drove the KOSPI’s 6% Drop

South Korea’s major memory chip manufacturers saw the biggest losses. Samsung Electronics fell 6.8% to 233,500 won, and SK Hynix (NASDAQ: SKHY) dropped 8.5% to 1.47 million won. These companies are influential enough in the KOSPI that their declines can pull the entire index down. The tech-heavy KOSDAQ also suffered, falling 4.4%.

Selling pressure came mainly from foreign investors, who offloaded a net 1.81 trillion won in shares, selling far more than they bought. In contrast, local retail investors bought a net 1.05 trillion won worth of shares, and institutions added a net 599 billion won, suggesting local buyers were capitalizing on the drop.

The decline was steep enough to trigger a sell-side circuit breaker, known as a “sidecar,” on the Korea Exchange. This mechanism halts computer-driven program selling for five minutes if KOSPI 200 futures move 5% or more and hold that move for one minute.

A Chinese Chip Announcement, Not Crypto, Triggered the Sell-Off

Fears in the memory-chip sector drove the stock market crash. Investors were concerned that a Chinese company might ramp up competition after announcing plans to unveil next-generation server memory products. These high-margin chips have been a crucial revenue source for Korean manufacturers during the surge in AI data centers.

Previously, investors reacted similarly when concerns arose, such as in July when SK Hynix and SanDisk experienced notable declines. This time, the anxiety spread to Wall Street, causing shares of U.S. chipmakers like Micron Technology (NASDAQ: MU | MU Price Prediction) to slip. While the sentiment affected chip stocks worldwide, crypto played no role in this sell-off, limiting the extent of Lee’s claims.

How Margin Calls in Seoul Could Spill Into Ether

Margin trading allows investors to borrow money from brokers to buy more stock than they could afford outright, using their existing shares as collateral. When stock prices fall, this collateral loses value, leading brokers to issue margin calls—requests for additional funds. If an investor can’t meet the margin call, the broker may sell their shares in a forced sale.

Lee’s argument introduces another layer, as cryptocurrency trades around the clock and can be sold quickly. An investor facing a margin call might sell crypto to raise cash, regardless of their views on the asset. Lee noted that many Koreans hold virtual currencies, and Korean banks are also becoming more involved in the crypto market. From his perspective, a wave of margin calls could increase selling pressure on Ether.

Korean Trading Data Doesn’t Back Lee’s Warning Yet

However, Lee’s argument largely relies on speculation. He didn’t provide any figures for potential crypto sales or mention that Korean investors were actively selling Ether in response to the stock market decline. Additionally, he cited no data from Korean exchanges or evidence of price discrepancies between Korean and global crypto markets to support his theory.

The flow of investment suggests otherwise. During the sell-off, Korean retail investors were net buyers, suggesting that while individual margin calls may have forced sales, the overall retail trend was toward buying shares.

Crypto prices also provide little clarity. Ether was priced at $2,531, down 6.2% over the week, while Bitcoin (CRYPTO: BTC) traded at $83,871, down 1.7% and still 33% below its high of $126,080. These weekly trends extend beyond a single Korean trading session, and crypto was already under pressure before the Seoul market opened, complicating any direct correlation.

In addition, South Korea’s financial authorities have blocked web access to 27 unregistered overseas crypto platforms, extending previous restrictions. While this move makes offshore trading harder for Koreans, it does not connect to the margin-selling scenario Lee proposes.

Can a South Korean Stock Crash Affect Ethereum?

In theory, it is possible, but the October 13 data does not provide clear evidence. Therefore, take Lee’s warning with caution. Forced selling can indeed affect multiple markets, and while he may be correct that it can impact unrelated assets, the immediate evidence does not strongly support his claims.

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