Top Ethereum (ETH) bull and co-founder of Fundstrat Tom Lee has issued a very unusual bearish alert for the second-largest crypto.
According to his latest post on X, Lee sounded an alarm about the potential negative impact of the dramatic stock market drop in South Korea on the crypto market, which may trigger more ETH sell-offs.
"This major decline in Korean equities is likely spilling over into crypto," Lee wrote. Lee expressed serious concern about South Korean brokerages' margin liquidations. He also mentioned the fact that South Korean investors hold a large share of crypto, and the crypto asset market is vulnerable to financial contagion. "Short-term pain," he continued, and highlighted ETH.
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Lee issued the bearish alert at a time when South Korea's benchmark KOSPI dropped over 6% on Tuesday, Oct. 13 due to the massive sell-off in technology and semiconductor stocks. The stock market crash was so severe that the Korea Exchange had to take emergency market stabilization measures.
What's happening in South Korea?
The South Korean stock market has been under pressure due to growing concerns about the artificial intelligence boom and the competitiveness of major South Korean semiconductor companies.
The massive stock market sell-off has mainly affected two of the most influential Korean stock market companies: Samsung Electronics and SK Hynix.
It was reported that Chinese memory chip maker ChangXin Memory Technologies (CXMT) made considerable progress in terms of semiconductor technology. That is why there are concerns about growing competition from China that could negatively impact memory chip prices and profit margins.
Notably, U.S. semiconductor stocks also plunged. The last session saw a significant drop of 2.67% for the Philadelphia Semiconductor Index.
Korea Exchange triggered the so-called sell-side sidecar at approximately 9:48 a.m. local time due to a drop of over 5% in KOSPI 200 futures. However, the intervention could not prevent a wider sell-off.