South Korean retail investors have shifted their focus away from Tesla stock and towards crypto investments, with a net outflow of $657 million in August, the largest since early 2023. This move comes as traders in South Korea show growing disillusionment with the electric vehicle maker and a preference for volatile crypto assets.
According to a report by Bloomberg, Korean investors have been reducing their purchases of U.S. big tech shares and increasing their investments in crypto-related stocks. The shift in investment preferences is reflected in the numbers, with crypto-related stock investments surging from 8.5% in January to 36.5% in June before declining slightly to 31.4% in July.
President Lee Jae-myung’s administration has designated the development of the crypto market as a key national task, leading to a surge in crypto adoption among Korean investors. As of August, over 10,000 Korean crypto investors hold assets exceeding $750,000, with the nation boasting 10.86 million active trading accounts, representing roughly 20% of the population.
While Tesla remains the top foreign stock among Korean retail traders, with $21.9 billion in holdings, investor sentiment towards the company has soured considerably. This sentiment shift is evident in the leveraged TSLL ETF, which saw its biggest monthly outflow since early 2024.
Young Korean investors in their 20s are leading the charge in crypto adoption, with an average holding of 2.69 billion won. This generation is increasingly favoring digital assets over traditional U.S. tech stocks, allocating an average of 14% of their financial assets to cryptocurrencies.
The government-led crypto infrastructure revolution in South Korea is accelerating, with the administration fast-tracking pro-business crypto reforms. This includes reclassifying crypto trading firms as “venture companies” to grant them access to tax incentives, subsidies, and state-backed financing.
Financial regulators have also lifted restrictions on institutional crypto investments and are preparing to approve Korea’s first spot crypto ETFs. Major banks have established dedicated crypto teams in anticipation of legislative approval, with regional institutions also forming blockchain teams to cover all aspects of distributed ledger technology.
As adoption of crypto grows in South Korea, the Financial Intelligence Unit is reorganizing anti-money laundering protocols to institutionalize the use of stablecoins, conducting external research to compile guidelines for operators and issuers.
In conclusion, South Korean investors are shifting their focus from traditional stocks like Tesla towards crypto investments, reflecting a growing trend towards digital assets in the country’s investment landscape. With the government supporting the development of the crypto market, South Korea is poised to become a global crypto powerhouse in the coming years.