Korean Investors Learn Leverage Lesson in AI-Linked Equity Bubble

Korean retail investors have recently experienced a painful lesson about leverage and hype after riding the KOSPI index to a nearly 180% surge in roughly 10 months. The bubble burst by mid-2026, with the KOSPI shedding nearly 25% in just four weeks.

Investors had pivoted en masse from memecoins to AI-linked equities in late 2025, attracted by semiconductor giants SK Hynix and Samsung Electronics. Trading volumes on domestic crypto exchanges like Upbit and Bithumb plummeted as money flowed out of digital assets and into stock portfolios.

Leveraged single-stock ETFs tracking SK Hynix and Samsung Electronics had attracted tens of billions in assets, leading to forced liquidations that cascaded through the market. The March 2026 downturn saw capital begin flowing back toward exchanges, with some speculating that Korean investors may be heading for another rotation.

The absence of major crypto-native AI tokens or protocols emerging as beneficiaries during this period suggests a genuine gap between where retail attention sits and what the crypto market is currently offering. The scenario has implications for crypto traders, who have historically been influenced by Korean exchange volumes.