South Korean retail investors net sold $655 million worth of TSL stocks in August: funds are rapidly shifting towards encryption investments, Bitmine raised $253 million.

Korean retail investors are withdrawing from TSL stocks on a large scale, with a net sell-off of $657 million in August, marking the largest outflow record since the beginning of 2023. Funds are clearly shifting towards the crypto assets sector, with related concept stock Bitmine Immersion Technologies attracting $253 million in a single month. This shift stems from investors' disappointment with TSL's AI narrative capabilities, as well as the Korean government's policy of listing the construction of the digital asset ecosystem as a "national core task". Currently, there are over 10,000 investors in Korea holding more than 1 billion won ($750,000) in crypto assets, with the average holding of the young population in their twenties reaching 26.9 billion won, the highest among all age groups.

TSL Faces Largest Scale Retail Investor Dumping, Leverage ETFs See Concurrent Fund Outflow

(Source: Bloomberg)

According to Bloomberg's calculations of custody data, South Korean retail investors net sold $655 million worth of TSL shares in August, marking the largest outflow since at least the beginning of 2023. The leveraged ETF product TSLL, which offers double the Tesla risk exposure, also faced capital outflow, with redemptions reaching $554 million in August, the highest amount since early 2024. Although Tesla remains the most held foreign stock by South Korean retail investors (with holdings of $21.9 billion), investor sentiment has clearly worsened. A 33-year-old investor, Han Jeong-su, stated: "Tesla used to provide many inspiring narratives, but it has failed to win hearts, especially lacking leadership in the artificial intelligence narrative."

The capital-raising ability of crypto concept stocks has significantly increased, and investment preferences have undergone a structural transformation.

Data from the Korea International Financial Center shows that the purchasing amount of U.S. large tech stocks by Korean retail investors dropped sharply from an average of 1.68 billion USD per month from January to April to 260 million USD in July. Meanwhile, the proportion of investments in crypto-related stocks surged from 8.5% in January to 36.5% in June, and although it fell back to 31.4% in July, it remains at a high level. Bitmine Immersion Technologies, which serves as a proxy investment for Ethereum, saw net inflows of 253 million USD in August, indicating that funds are shifting towards high-risk crypto-related assets. The change in investment behavior is also reflected in the fact that young investors in their 20s allocate an average of 14% of their financial assets to crypto assets. Despite accounting for only 1.3% (137 individuals) of the high-net-worth crypto holders, their average holdings amount to 26.9 billion KRW, ranking first among all age groups.

Government policies strongly promote the development of the crypto market, and financial institutions are fully deploying.

The Lee Jae-myung government has listed the construction of the digital asset ecosystem as a key task in the "Five-Year National Management Plan," accelerating the promotion of business-friendly crypto reforms. The Ministry of SMEs and Startups plans to revise regulations to reclassify virtual asset service providers as "risk enterprises," enabling them to obtain tax benefits, subsidies, and national support financing that have been denied since 2018. The Financial Committee has proposed an implementation plan for spot crypto ETFs and a regulatory framework for the Korean won stablecoin, with plans to implement it by the end of 2025. Major banks are establishing specialized teams for crypto: Woori Bank has formed a 9-member digital asset team; KB Kookmin Bank has created a digital asset response committee covering KB Financial Group's affiliated companies; Shinhan Bank has established a 20-member crypto working group; local institutions like Busan Bank have also set up blockchain teams covering all areas of distributed ledger technology.

The penetration rate of encryption continues to rise, and the anti-money laundering system is upgrading simultaneously.

According to survey data, 27% of South Koreans currently hold crypto assets, with an average investment of 13 million won (approximately 9,547 USD) per investor. More than half of South Koreans aged 20-59 have experience in crypto trading, making South Korea a global crypto powerhouse. As of August, over 10,000 crypto investors in South Korea hold assets exceeding 1 billion won (750,000 USD), with approximately 20% of the population having 10.86 million active trading accounts. As adoption rates increase, financial intelligence units are beginning to restructure anti-money laundering protocols, institutionalizing the use of stablecoins, and compiling operational guidelines through external research, with relevant guidelines expected to be released in December.

Conclusion

The investment landscape for retail investors in South Korea is undergoing profound changes, shifting from a focus on American tech stocks like TSL to the realm of crypto assets. This transition is driven by both disappointment in the narrative capabilities of traditional tech companies and strong support from government policies along with comprehensive follow-up from financial institutions. Young investors are becoming the leaders in crypto adoption, and their high allocation ratios suggest that structural changes may continue to deepen. With the imminent approval of spot ETFs and the implementation of a regulatory framework for stablecoins, South Korea's crypto market infrastructure is rapidly improving, but investors still need to pay attention to changes in Federal Reserve policies, fluctuations in the Korean won exchange rate, and compliance cost changes brought about by new anti-money laundering regulations.