Original Article Title: "South Korean Investors Flock to 'Coin Stocks,' BitMine Becomes New Favorite"

Original Article Author: angelilu, Foresight News

The cryptocurrency trading frenzy in South Korea has quietly entered the "stock market." The previous "Kimchi Premium" was once a phenomenon that captivated the global cryptocurrency market. This country of only 51 million people once saw a Bitcoin trading volume powerful enough to shake the global market. Although strong government regulations have made this premium phenomenon history, the adventurous spirit of the Korean people has not diminished; it is just exploring new outlets.

Moreover, the main force behind this craze is not Korean institutional giants but the young generation of retail investors who are betting on the future. In this country of 51 million people, as many as 18 million are active in the digital asset market, representing over a third of the country's total population. Among them, nearly a quarter of 20 to 39-year-olds see cryptocurrency trading as the only chip to turn their lives around.

BitMine Emerges as the Latest Trading Target

According to Bloomberg citing data from a South Korean securities depository, Korean investors have poured $259 million of net funds into BitMine stock since July, propelling BitMine to the top spot on the list of South Korea's overseas stock purchases.

BitMine is a U.S.-based Bitcoin mining company supported by the "King of Silicon Valley," Peter Thiel. Recently, it has transitioned from Bitcoin mining to adopting ETH as part of its financial strategy, now holding over 1.15 million ETH worth over $4.96 billion. This has made it a significant "treasury" of ETH on Wall Street. Interestingly, the key figure who brought ETH to Wall Street, Tom Lee, is also a director at BitMine.

Tom Lee is a Korean American. After experiencing the brutal lesson of LUNA coin's crash, Korean investors' enthusiasm for risk assets has not waned. The appearance of a "fellow countryman" from overseas who has achieved great success in the financial world undoubtedly gained high trust and attention. For Korean retail investors, this is not just an industry expert's opinion but also a call with nationalistic appeal. This subtle cultural identification further strengthens their confidence and enthusiasm for the cryptocurrency market.

Why Not Just Buy ETH Directly?

A key question arises: If one is bullish on Ethereum, why go through a large circle to buy BitMine's stock instead of directly purchasing ETH?

Volatility may be the answer. Although cryptocurrencies are known for their extreme volatility, some retail investors may believe that by participating in the stock market, they can experience a different kind of risk exposure.

Looking at actual backtesting, ETH's price surged from $2,500 to $3,800 in July, a 52% increase. During the same period, the price of BitMine stock (BMNR) rose from $46 on July 1 to a high of $135, marking a peak surge of 193%.

However, as of the time of writing, ETH has surged to $4,300, reaching its highest level since December 2021. Meanwhile, BMNR's price has only slightly rebounded to $58.98. Risk-seeking Korean investors seem to prefer investment assets with higher volatility, even though this roller-coaster ride of ups and downs can send numerous chasing retail investors plummeting from the clouds.

However, ETH's direct trading volume is also significant, with just South Korea's largest exchange, Upbit, seeing $111.1 billion in ETH trading volume for the entire month of July, with net inflows currently unaccounted for.

BitMine is Just a Microcosm of the "Coin Stock" Craze

Nevertheless, this is not the first time Koreans have rushed into "coin stocks." When stablecoin company Circle went public, it already attracted the attention of Korean investors. The net buy volume for Circle in the month of its listing reached $450 million, driving Circle's P/E ratio to a speculative 187x, far exceeding the reasonable valuation of any traditional fintech company.

This frenzy also swept through the Korean domestic market. With the new South Korean government's crypto-friendly policies fueling retail investors' expectations, this partly contributed to driving the Korean Composite Stock Price Index to nearly a four-year high. When the Bank of Korea announced the launch of a Central Bank Digital Currency (CBDC) project, retail investors sensed a commercial opportunity. Companies involved in the project like Kakao Pay and LG CNS saw their stock prices seemingly take off like rockets in a short period. Kakao Pay's stock price doubled in just one month, while LG CNS quickly followed suit, soaring by nearly 70%.

When the Craze Finally Subsides

Korea's "crypto-related stock" craze is more a reflection of a deep-seated social phenomenon than a financial one. It illustrates how, in an increasingly narrow traditional wealth accumulation environment, young Koreans are eagerly seeking non-traditional, high-risk paths to breakthrough.

As Dragonfly's Hadick warned: "When the premium disappears, investors will quickly sell off the stock, and these phenomena are usually short-lived." The valuations of "crypto-related stocks" that have been driven up by emotion and speculation may essentially be a massive bubble. When the frenzy eventually subsides, the truth of who is swimming naked may only be revealed at that time.

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