Tom Lee (톰 리), a Fundstrat co-founder known as an Ethereum bull, warned that a sharp drop in South Korean stocks could lead to additional selling in the cryptocurrency market. He raised the possibility that South Korean investors’ liquidation of risk assets could spread to crypto markets. He also stressed short-term downside risks for Ethereum, despite his usually optimistic stance.

On Oct. 13 local time, blockchain outlet U.Today reported that Lee said on X, formerly known as Twitter, that South Korea’s stock market plunge may be spilling over into the cryptocurrency market. He predicted that the sharp fall in South Korean shares could add selling pressure in digital assets.

Lee’s concerns focused on the chance that losses in South Korean stocks could spread to other risk assets. The analysis said selling in crypto markets could intensify if forced selling from margin trading at local brokerages and investors’ risk-asset reduction happen at the same time. It also said the shock to domestic financial markets could affect digital-asset prices, as South Korean investors account for a significant share of the crypto market.

He called the situation “short-term pain” and mentioned Ethereum directly. The fact that Lee, who has consistently offered a favorable outlook on Ethereum, publicly warned of short-term downside risks is drawing attention.

South Korean stocks plunged on the day, led by technology and semiconductor shares. The KOSPI fell more than 6 percent. A sell-sidecar was triggered at about 9:48 a.m. as KOSPI 200 futures tumbled. A sell-sidecar is a market-stabilization measure that temporarily suspends the effectiveness of program sell orders when futures prices drop sharply beyond a set level.

The drop reflected concerns over whether expectations for growth in the artificial intelligence industry can be sustained and the possibility of intensifying competition in semiconductors. Selling was concentrated in major domestic chipmakers such as Samsung Electronics and SK Hynix. News of technological progress at China’s chipmaker ChangXin Memory Technologies (CXMT) was also cited as a factor that heightened worries about intensifying competition and falling memory prices.

U.S. chip stocks also weakened. The Philadelphia Semiconductor Index fell 2.67 percent in the previous session, underscoring deteriorating investor sentiment across the semiconductor sector. The sharp fall in South Korean equities has gone beyond company-specific earnings worries and has coincided with broader pressure on global tech shares.

What Lee focused on was the possibility that such a stock-market shock could spill over into the cryptocurrency market. If investors who suffered losses in equities move to liquidate margin trades or reduce risk-asset exposure, cryptocurrencies could also become targets for selling. In a period of heightened market volatility, investors may also sell multiple assets at the same time to secure cash.

Still, it needs to be separately verified whether the sharp fall in South Korean stocks actually triggered additional selling in the cryptocurrency market. Lee’s remarks were a warning about possible contagion between financial markets, and do not mean that the drop in South Korean stocks will lead to a further fall in Ethereum prices.

Key points to watch will be how long volatility in the domestic stock market lasts and whether margin liquidations and risk-asset aversion spread to the cryptocurrency market. If instability in South Korean equities continues, major cryptocurrencies including Ethereum could face short-term selling pressure and increased volatility.

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