The Korea Exchange suspended program sell orders for five minutes after KOSPI 200 futures fell 5.08%, triggering a sell-side sidecar for the first time since Aug. 19
- Tom Lee said margin liquidations at Korean brokerages could force investors to sell crypto to raise cash.
- A CryptoQuant contributor said an Ethereum liquidity gauge on Binance hit a near seven-month low.
- Ether traded at $2,520, down more than 1% over 24 hours, amid broader market weakness.
Tom Lee said the crash in Korean equities could spill over into crypto, and he flagged short-term pain for Ethereum (ETH) if margin calls prompt investors to liquidate other holdings.
The chairman of BitMine Immersion Technologies (BMNR) and co-founder of Fundstrat said on X on Tuesday that Ethereum's price might decline because of a significant sell-off in South Korea's benchmark Korea Composite Stock Price Index, or KOSPI. Lee indicated two channels. One is the margin liquidations at Korean brokerages. The other is the amount of cryptocurrency held by Korean investors.
Tom Lee Flags Potential Crypto Selling From Korean Margin Calls
Margin liquidations occur when an investor borrows against collateral to trade, and the broker forcibly sells the position when the collateral falls short.
Lee argued that to cover those margin calls on their stock accounts, investors might sell other assets, including cryptocurrency. He did not state that Korean investors had sold Ether as a result of the decline or provide a figure for the forced selling.
KOSPI Sell-Side Sidecar Triggers
After KOSPI 200 futures dropped 5.08% to 955.02 and stayed there for five minutes on Tuesday, the Korea Exchange announced it suspended program sell orders on the main board for five minutes starting at 9:47:58 a.m. local time.
After 35 trading sessions, it was the first sell-side sidecar on the KOSPI since August 19. As of 9:49 a.m., the KOSPI was down 4.06% at 6,125.17, according to a Seoul Economic Daily report.
Warnings about AI spending from industry leaders and the emerging threat of competition from China’s CXMT sparked a global rout in chip and semiconductor stocks, with Samsung and SK Hynix dragging the Korean market lower. The Direxion Daily South Korea Bull 3X Shares (KORU ETF) cracked 10% in early U.S. premarket trade.
Ethereum Liquidity Gauge At Seven-Month Low
Ethereum was already in a fix before the KOSPI index fell. On Monday, the ETH Binance Liquidity Shock Z-Score fell to its lowest level in nearly seven months, around -1.00, according to CryptoQuant contributor Arab Chain.
The gauge measures how much Ethereum liquidity flows on Binance have deviated from their one-year norm, so a negative reading means activity is below that norm.
The reading itself does not show selling pressure, the analyst warned, as the gauge measures liquidity changes, not price direction. The drop came as Ether reserves on Binance fell, which could signal coins are moving off the exchange and leaving less supply available to sell, the CryptoQuant analyst said.
Ethereum’s price was trading at $2,520, down over 1% in the last 24 hours, amid broader weakness. On Stocktwits, retail sentiment around ETH remained in the extremely bearish zone, accompanied by normal chatter levels over the past.
ETH has been down over 15% so far this year, and lost over 40% in the last 12 months.
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