A remarkable shift is unfolding in South Korean financial markets: a parabolic rally in the benchmark KOSPI 200 index is draining liquidity from the country’s crypto sector. Former token traders have pivoted to stock index contracts on Hyperliquid, where the KOSPI 200 has become a niche but profitable trade. Data from Hyperliquid shows that as of May 5, about 63% of open positions in the index were in profit, though overall open interest remained modest at just $121,000.
The KOSPI 200 has climbed 31.84% in the past month and over 209% in the past year, even surpassing Bitcoin in volatility. The explosive growth is linked to the government’s Corporate Value Up program, introduced in 2024, which incentivizes corporations and investors to boost historically undervalued stocks. A dividend tax cut from 45% to 13–30% in December 2025 further sweetened the deal. The index’s price-to-earnings ratio of 26.41 compares favorably to the Nasdaq (23.90) and the S&P 500 (30.90), while its heavy weighting in AI chipmakers like Samsung Electronics and SK Hynix (42% combined) makes it a play on the artificial intelligence boom.
As stocks surge, crypto is losing momentum. Total holdings across major exchanges Upbit and Bithumb dropped from 121.8 trillion won to 60.6 trillion won by February. Daily trading volumes collapsed from 17.1 trillion won in late 2024 to just 4.5 trillion won, and exchange deposits shrank. NH Investment & Securities analyst Hong Sung-wook noted that the stock rally and weaker crypto prices have driven a clear capital rotation. Meanwhile, stablecoin holdings on these platforms have jumped from under 100 billion won to over 600 billion won, reflecting a rush for dollar exposure amid currency volatility, according to Korbit’s Kim Min-seung.
On Hyperliquid, the shift is tangible: stock indexes now rank among the most actively traded assets, with the S&P 500 contract trailing only Bitcoin, Ether, and HYPE in daily volume. The move signals growing distrust in crypto markets—even for revenue-generating apps—fueled by hacks and uncertainty. As KOSPI tests new all-time highs above 6,900 and targets the 8,000–9,000 range, the drain on crypto liquidity may intensify.
