Kospi triggers back-to-back circuit breaker as Bitcoin rises above $64,000

The Kospi fell as much as 12.1% to an intraday low of 5,260 on Wednesday, triggering a circuit breaker for the second straight session after chip-stock contagion spread from China-linked catalysts.

"The circular financing between Nvidia, OpenAI and Oracle means the same dollar gets counted as revenue three times — this is not demand, it's an accounting trick," said Nigel Green, chief executive officer at deVere Group.

Samsung Electronics dropped as much as 9.5%, while SK Hynix fell 11% before the Korea Exchange halted trading for 20 minutes. The Kospi later pared losses to 5,568.19, down 7.6%, as institutional investors net purchased 2.66 trillion won ($2.25 billion). The Kosdaq index traded at 655.53, down 7.1%, after falling more than 10% intraday.

The back-to-back circuit breakers — the first time South Korea has triggered consecutive trading halts — signal extreme systemic stress in Asia's fourth-largest equity market. Bitcoin's rise above $64,000, up 1% on the day, offers the first test of whether crypto can serve as a haven during an equity rout centered on the world's most concentrated chip supply chain.

The selloff traces to two China-specific catalysts. Changxin Memory Technologies, the Hefei-based DRAM maker known as CXMT, closed its Shanghai STAR Market debut Monday up 466%, valuing it near 3.3 trillion yuan — surpassing Industrial and Commercial Bank of China as the most valuable mainland-listed company. Separately, reports emerged that a Chinese state-backed firm has begun producing immersion deep ultraviolet lithography machines, the bottleneck tool Western export controls were designed to withhold.

The Kospi's 10.8% plunge on Tuesday — its worst single-day drop since the 2008 financial crisis — had already erased months of gains. The same semiconductor names had rebounded from an earlier selloff driven by memory valuation fears before this week's collapse. Japan's Nikkei 225 lost about 4% on Tuesday, with Tokyo Electron shedding 11% and memory maker Kioxia falling more than 18%.

Bitcoin Decouples as Winklevoss Calls Rotation

Gemini co-founder Cameron Winklevoss declared the AI trade over Tuesday, urging investors to rotate into Bitcoin and Zcash. His Zcash position is not new — in April he argued that investors bullish on AI and quantum computing should also be bullish on the privacy coin, which remains up roughly 1,033% over the past year.

Bitcoin's resilience above $64,000 during the Kospi's collapse marks a potential decoupling from equities. Until now, the question of whether crypto could serve as a portfolio hedge during a semiconductor-led crash remained theoretical. Wednesday's session provides the first real-world data point.

The divergence cuts both ways. UBS told clients the AI trade is maturing rather than breaking, arguing that cheaper models redistribute compute demand instead of destroying it. Peter Schiff, by contrast, treats the drawdown as confirmation of a peak, pointing to SpaceX shares now roughly 48% below their $225.64 peak.

What Happens Next

The Kospi's ability to hold above 5,500 will depend on whether institutional buying can absorb continued foreign and retail selling. Foreign investors sold a net 1.76 trillion won on Tuesday alone. The next catalyst is Friday's U.S. personal consumption expenditures data, which will set expectations for the Federal Reserve's September meeting.

This article is for informational purposes only and does not constitute investment advice.