Bitcoin defies $800 million crypto wipeout as South Korea’s AI stock market crashes

On Tuesday, Bitcoin climbed back above $83,000 despite a sharp selloff across Asian stock markets, even as cryptocurrency liquidations surpassed the $800 million mark.

BTC managed to bounce back after a brief dip below $81,000. At the same time, semiconductor shares continued a severe downturn that pulled South Korea’s benchmark KOSPI index down by 6%.

South Korea’s AI stock collapse exposes concentrated market risks

Reports indicated that the KOSPI index dropped as much as 7.4% before paring some losses to finish the session at 6,035.35. The downward movement temporarily pushed the index beneath 6,000, prompting a sell-side trading curb as the nation’s premier semiconductor manufacturers extended their losses.

Shares of Samsung Electronics dropped 7.39%, while SK Hynix fell 10.09%, extending a five-session losing streak for both entities.

Together, these two memory-chip producers make up roughly half of the KOSPI’s entire market capitalization, leaving the broader index exceptionally vulnerable to shifts in expectations surrounding AI infrastructure spending.

During Tuesday’s trading hours, foreign institutional investors offloaded about 4.5 trillion won ($3.35 billion) worth of Korean equities, continuing a trend of capital outflows that has heavily penalized the country’s tech sector.

According to investment research firm Paradis Labs, the retreat highlighted a consistent withdrawal of foreign capital from both Samsung and SK Hynix.

The firm described the dominant institutional strategy as “Sell Korea, Buy US.” Meanwhile, local investors maintained a more patient stance, with some shifting funds out of memory-chip makers and into financial equities.

Paradis Labs also pointed out that market conditions had been worsening over multiple sessions, noting that recent remarks from Broadcom CEO Hock Tan amplified the ongoing selloff.

Tan likened speculative AI investments to gambling, exacerbating worries that massive capital expenditures in the sector might fail to deliver adequate returns.

Those comments coincided with a technological unveiling by China-based ChangXin Memory Technologies, which announced the creation of a DRAM architecture designed to shrink the memory-cell area by approximately 30%.

The firm aims to roll out items featuring this technology by the end of 2026, stirring anxieties about heightened competition for South Korean memory producers. However, the company’s capability to manufacture the technology commercially at scale is still unproven.

Analysts at Bitunix noted that the wider correction underscored heightened vulnerability to financing risks and concentrated investor positioning tied to the AI sector.

They pointed out that strong earnings reports from semiconductor firms failed to fend off heavy selling, while lower leveraged exposure and reduced backing from share buybaks may have exacerbated the slide.

This market pressure has similarly impacted broader institutional strategies. BlackRock downgraded US equities from overweight to neutral, boosting its exposure to short-term Treasuries amid growing worries over AI market volatility and climbing borrowing expenses.

Concurrently, Paradis Labs cautioned that South Korea’s heavy reliance on imported crude oil introduces an extra layer of risk as conflicts involving Iran intensify. Persistent spikes in energy costs could accelerate inflationary pressures and diminish confidence in the local stock market.

The weakness in semiconductors has already spilled beyond Korea’s borders: the Philadelphia Semiconductor Index dropped 2.7% on Monday, and Japan’s Nikkei 225 declined 1.8% on Tuesday.

Bitcoin’s recovery faces pressure after $813 million liquidation wave

While Bitcoin’s recovery moved in the opposite direction of the sharp declines seen in Asian stock markets, it followed a dramatic shakeout in derivatives that wiped out hundreds of millions of dollars in leveraged bets.

CoinGlass statistics show that cryptocurrency liquidations totaled $812.9 million over a 24-hour window, impacting 170,209 traders. Long positions represented $686.72 million—or 84.5%—of the overall liquidations, compared to $126.19 million in short positions.

Bitcoin suffered the steepest losses at $192.14 million, with long positions comprising close to 74% of that figure. Ethereum followed with $180.5 million liquidated, and Solana experienced $60.85 million in liquidations. The single biggest liquidation order was a $9.65 million Bitcoin long position executed on Binance.

As Bitcoin’s price dropped, the forced unwinding of long positions accelerated the downward momentum by adding fresh selling pressure. Conversely, the subsequent bounce caught bearish traders off guard, with short liquidations fueling a swift reversal.

Even so, underlying trading indicators suggest that buyers have found it difficult to retake full control despite the price recovery.

CryptoQuant analyst JA Maartunn highlighted that Bitcoin’s Net Taker Volume dipped back into negative territory, signaling that aggressive selling within the derivatives markets continued to outpace buying demand.

This metric points to persistent selling pressure underneath Bitcoin’s price recovery, suggesting that passive accumulation and the closing of short positions may be propping up prices in the absence of sustained, aggressive demand.

As a result, Bitcoin’s rebound remains vulnerable to fresh tests should the stock market downturn worsen or leveraged traders adjust their positions ahead of the upcoming US inflation report on Wednesday.

?Frequently Asked Questions

01Why did Bitcoin rebound despite the Asian stock market selloff?

Bitcoin recovered above $83,000 following a massive liquidation event that swept out over $800 million in leveraged positions, which included short liquidations that fueled a sharp price reversal.

02What caused the slump in South Korea’s stock market?

The KOSPI index dropped significantly due to a severe rout in major semiconductor shares like Samsung Electronics and SK Hynix, driven by foreign institutional outflows, cautious AI infrastructure spending outlooks, and potential new competition from China.

03How much were total crypto liquidations during the market event?

According to CoinGlass data, total cryptocurrency liquidations reached $812.9 million over a 24-hour period, affecting over 170,000 traders.