What Korea’s big bet means for global markets – Crypto News

Massive pullout of Korean investors from Tesla

For years, Korean retail investors have been behind Tesla, contributing significantly to the company’s global stock market surges. However, in August 2025, Korean investors withdrew a whopping $657 million from Tesla stock, the largest monthly outflow in over two years.

The withdrawal of investments extends beyond direct stock investments. Leveraged products linked to Tesla, such as the 2x leveraged exchange-traded fund (ETF), TSLL, saw outflows of $554 million in August 2025, the largest since early 2024.

For retail investors who previously boosted Tesla’s gains, this sell-off reflects a significant decline in enthusiasm. It signifies more than just financial figures, pointing to a shift in investor confidence, diminishing trust in the electric vehicle (EV) company’s future and a growing interest in alternative investment opportunities, such as US-listed cryptocurrency firms.

This shift is striking, given that Korean investors still hold around $21.9 billion in Tesla shares, which remains their largest foreign equity holding. While this does not erase their long-term commitment, it highlights growing uncertainty about Tesla’s future direction.

Did you know? South Korea-based exchanges such as Upbit and Bithumb process billions daily, making Seoul a hub for global crypto liquidity.

Why Korean investors pulled out of Tesla

Korean investors are pulling out of Tesla after years of loyalty due to concerns about the company’s direction and other reasons.

• Missed promises: Tesla has often failed to deliver on bold deadlines. For instance, Musk promised 1 million robotaxis by 2020 and widespread full self-driving (FSD) capability, but years later, the technology remains in beta. Similarly, the long-delayed Cybertruck only began deliveries in late 2023, years behind schedule. The next-generation Roadster, which was to be launched in 2020, could now roll out in 2025.
• Political fallout: Musk’s frequent interventions in US politics and social life, including a public fallout with President Donald Trump and polarizing comments on social issues — cast a shadow on his credibility. His entry into government and the swift, unceremonious departure seem to have further eroded his reputation in some circles.
• Declining sales: In Q2 2025, Tesla’s deliveries globally plunged 13%-13.5% year-over-year, delivering around 384,122 units compared to 443,956 in Q2 2024. In Europe, July 2025 sales dropped 40% year-over-year, with Tesla delivering just 8,800 cars. The company’s year-to-date sales dove 34%, and market share in EVs went down from 11% to 5%.
• Rising competition: Chinese automakers like BYD, Nio and XPeng, alongside European giants like Volkswagen, are offering cheaper, feature-rich EVs. The arrival of these alternatives in the market has also affected Tesla’s dominance. For instance, BYD tripled its July sales in China to around 13,500 units, compared to 8,800 units of Tesla. Similarly, XPeng delivered 37,709 units in August 2025, a 168.7% year-on-year increase. Nio also garnered record deliveries as well, with 31,305 vehicles, up 55.2% YoY. BYD emerged as the leader, selling 373,626 EVs in August and over 1.1 million EVs in Q2 alone, nearly three times Tesla’s Q2 deliveries of 384,122 vehicles.
• Unpredictable leadership: Musk’s abrupt shifts, buying Twitter (now X), prioritizing AI projects over EVs and sudden management shakeups may have created uncertainty around Tesla’s focus.

Did you know? Nearly one in five South Koreans now invests in digital assets, with adoption climbing to over 25% among people aged 20-50.

Shift of Korean investors from Tesla to crypto

South Korean retail investors, known for their well-informed investments in global stocks, are now turning their attention to cryptocurrency-related stocks. This shift has become unmistakable as of September 2025, indicating a new direction for Korean investment abroad.

By the middle of 2025, South Korean investors had invested over $12 billion in US-listed cryptocurrency companies. The scale and speed of this investment wave demonstrate how Korean traders, often called “fearless retail,” are embracing cryptocurrency as both a growth opportunity and a safeguard against declining confidence in traditional stocks like Tesla.

August 2025 highlighted the intensity of this shift. Investors allocated $426 million to Bitmine Immersion Technologies, a company closely linked to Ethereum’s growth. Circle, the issuer of USDC (USDC), received $226 million, while Coinbase, the largest cryptocurrency exchange in the US, attracted $183 million in Korean investments.

Even high-risk products saw strong demand, with a 2x leveraged Ether ETF drawing $282 million in the same month, reflecting retail investors’ enthusiasm for amplified exposure to the sector.

In all likelihood, the surge of Korean retail investment into cryptocurrency stocks is not just speculative activity. It seems to represent a fundamental change in investor preferences, one that could influence how Asian capital flows into global markets and how cryptocurrency gains adoption as a mainstream asset class.

Factors behind the pro-crypto shift in mood in South Korea

South Korea’s shift from traditional stocks to cryptocurrency-related assets results from a combination of social, regulatory and economic factors. Together, these elements explain why the country has become one of the world’s most active retail markets for digital assets.

Demographics and adoption

The popularity of cryptocurrency in South Korea is rooted in its population. Approximately 20% of South Koreans now own digital assets, with this figure rising to 25%-27% among those aged 20-50. 

This is the demographic group with the most financial resources and willingness to take risks. This generation has grown up with the rapid adoption of digital technologies, from mobile payments to online trading platforms, and has a cultural inclination toward speculative investments.

This combination of technological familiarity and risk tolerance makes cryptocurrency naturally align with their financial habits.

Regulatory support

Regulation, once an obstacle for the growth of crypto, has now become a driving force, thanks to a regulatory regime that is supportive of regulation. South Korea’s approach to regulating cryptocurrency is evolving to be more supportive.

This is demonstrated by the implementation of the Virtual Asset User Protection Act (VAUPA) in 2024, which is designed to safeguard investors and deter unfair trading practices. 

Furthermore, there are ongoing plans for the Digital Asset Basic Act (DABA), an initiative aimed at establishing a comprehensive regulatory framework for all virtual assets.

Economic conditions

South Korea’s economic environment has become more conducive to cryptocurrency adoption. Consistently low interest rates and limited investment opportunities within the country encourage investors to explore higher-yield options, such as digital assets.

Moreover, the slowing growth in traditional industries, like automotive and manufacturing, drives investors to pursue alternative sources of returns. A declining won, combined with significant capital flows into dollar-backed stablecoins, has also encouraged investment in crypto assets.

Did you know? The Korean won consistently ranks as one of the top three fiat currencies traded against Bitcoin (BTC) globally.

How South Korea’s bet on crypto is reshaping global market trends

South Korea, with an estimated GDP of around $1.87 trillion in 2024, has been a significant force in global cryptocurrency markets.

South Korean investors, usually renowned for bold, high-volume trading, have shifted billions from traditional stocks like Tesla into cryptocurrency-related stocks and ETFs.

This influx of capital has boosted liquidity for US-based exchanges, mining companies and tokenized financial products. This boost, in turn, improves the global visibility and credibility of digital assets.

South Korean investors have shown a preference for leveraged investments, such as 2x Ether (ETH) ETFs, increasing short-term market volatility and affecting price movements worldwide. Furthermore, South Korea’s shift is likely to shape institutional and retail investment approaches across the world.

Fund managers may customize products to meet Korean demand. Consequently, South Korean retail traders are exporting their speculative energy, creating both opportunities and instability. Their commitment to cryptocurrencies is reshaping global capital flows and investor behavior. Even the regulators worldwide observe Seoul’s policies as potential models.