Crypto analytics firm Alphractal has identified a historical correlation between South Korea's KOSPI index and Bitcoin's market cycles, suggesting that the current record high in the KOSPI could signal an approaching peak for Bitcoin. According to their analysis, when the KOSPI Composite Index reaches new record levels, Bitcoin has historically been trading near its cycle highs and poised for a decline.
The KOSPI recently closed at a record high of 3,344.20, a level not seen since 2021. Alphractal's research shows this pattern has occurred multiple times in history: in late 2021 when Bitcoin reached its November all-time high before a year-long decline, in late 2017 around Bitcoin's cycle peak, and in mid-2011 during mid-cycle peaks.
The correlation is explained by both assets' sensitivity to global risk sentiment. When risk appetite is positive, capital flows into both the KOSPI (influenced by global trade dynamics and emerging markets) and Bitcoin (as a 'risk-on' asset). Conversely, during risk-off periods, both tend to decline. Alphractal emphasizes this is not investment advice but rather an important macroeconomic signal for investors to consider alongside other factors.