Bitcoin Falls Under $63K as South Korea Admits Leveraged ETF Error
South Korea’s KOSPI plunged about 9.99% to 8,203.84 after regulators admitted they rushed approval of leveraged ETFs tied to Samsung Electronics and SK Hynix. The chip selloff erased over 12% from each stock and triggered an automatic trading halt. As risk assets hit, Bitcoin fell in tandem, dropping below $63,000 and briefly trading near $62,000.
Financial Supervisory Service Governor Lee Chan-jin said the leveraged ETFs—launched in late May—were approved too quickly. These funds aim to deliver multiples of daily stock performance, which can amplify losses when underlying shares fall. Sixteen leveraged products launched with about $3B in assets; ownership was reportedly dominated by retail (around 92%), raising concerns about forced rebalancing flows.
In crypto, Bitcoin’s break below key levels accelerated leverage unwind. CoinGlass data cited roughly $190M liquidated in the past hour, with total liquidations around $714M over 24 hours. Long traders accounted for most of the hour’s liquidations; forced closures were about $215M for Bitcoin and ~$177M for ETH.
The selloff also coincided with weaker spot Bitcoin ETF demand in the US, with a rolling 30-day net outflow of about $6.35B (a high since the funds began trading), removing a key source of buy-side support. The article frames the move as a broader risk-off retreat from tech and leverage across both TradFi and crypto, with Bitcoin positioned as the most affected.
Bearish
This is bearish for traders because the shock is coming from both sides of the market: TradFi risk assets (KOSPI tech/chip concentration) and crypto leverage mechanics.
- Direct linkage via risk-off: The regulator’s admission about leveraged ETFs tied to Samsung and SK Hynix triggered a sharp KOSPI decline and a broad Asia risk selloff. Bitcoin fell in the same window, confirming correlation during stress.
- Leverage unwind is self-reinforcing: The article cites large liquidation totals (about $714M/24h) and significant forced closures for BTC and ETH. When price breaks levels that threaten collateral, margin calls turn into additional sell pressure—similar to past “cascade” events seen when leverage is crowded and funding/flows weaken.
- ETF demand headwind: US spot Bitcoin ETFs saw a large 30-day net outflow (~$6.35B). Historically, sustained ETF outflows can reduce structural bid support and make declines more persistent, especially when leverage is being reduced.
Short-term: expect volatility to remain elevated and rallies to face resistance while liquidations are still working through and ETF outflows persist.
Long-term: if regulators introduce stabilization measures (e.g., leverage limits or product restrictions) and equity risk stabilizes, crypto could see partial relief. But as long as ETF outflows and leverage risk remain, downside pressure is likely to dominate.