South Korea's benchmark KOSPI index plunged nearly 10% on Tuesday, suffering its worst single-day drop since March 4, after the country's top financial regulator admitted to mishandling the approval of leveraged exchange-traded funds tied to major chipmakers. The index closed at 8,203.84, down 9.99%, triggering a market-wide trading halt. The crash spilled over into global markets, with Bitcoin briefly falling below $63,000.
Regulator's admission sparks sell-off
The rout began after the Financial Supervisory Service acknowledged that it had rushed the approval of leveraged ETFs linked to Samsung Electronics and SK Hynix, two of the largest companies on the KOSPI. The regulator's statement, made on Monday, raised concerns about excessive speculation and potential systemic risks. Investors reacted by dumping stocks, particularly in the tech and semiconductor sectors, which led the decline.
Bitcoin caught in the downdraft
Bitcoin dropped as low as $62,800 during Asian trading hours, according to data from CoinDesk, before recovering slightly to trade around $63,500. The cryptocurrency's decline mirrored the broader risk-off sentiment triggered by the KOSPI crash. Analysts noted that Bitcoin's correlation with equities has increased in recent months, making it vulnerable to sudden market shocks.
Market impact and outlook
The KOSPI's plunge erased over $200 billion in market value, with foreign investors leading the sell-off. The Bank of Korea said it would monitor the situation closely but did not announce any immediate intervention. Some traders expect further volatility as the regulator's admission could lead to tighter oversight of leveraged products. Bitcoin's next support level is seen around $60,000, with resistance at $65,000.