KOSPI Surpasses Bitcoin Volatility Amid AI Semiconductor Frenzy

The benchmark KOSPI equity index in South Korea has surpassed Bitcoin's realized volatility, sparking questions about institutional risk logic. For over a decade, volatility was used as an argument against investing in Bitcoin. However, this year's data shows that the KOSPI index has posted a 63% annualized year-to-date volatility rate, outpacing Bitcoin's 48%.

The KOSPI's high volatility can be attributed to its concentration on Samsung Electronics and SK Hynix, which together account for more than 50% of the index's total weight. These two companies are central nodes in the AI semiconductor supply chain, and their stocks surged during the first half of 2026.

The introduction of single-stock leveraged ETFs directly tracking these companies has also contributed to the KOSPI's volatility. These products use derivatives to deliver double the daily return of the underlying stock but have a mathematical trap called beta slippage, or volatility decay, which forces funds to buy more derivatives when the underlying rises and sell them when it falls.

The market impact of these leveraged ETFs was devastating, with losses amounting to approximately ₩58 trillion ($38.7 billion) by July 30. In response, the Korean government introduced measures to cap individual investors' holdings at 20% of their total portfolio and raised minimum cash deposit requirements.