Tom Lee Warns Ethereum Could Face More Selling Pressure as South Korean Stocks Crash

Fundstrat co-founder Tom Lee has warned that Ethereum (ETH) could face further selling pressure amid heavy losses in South Korea’s stock market. According to Lee’s latest post on X, widespread equity liquidations could spill into cryptocurrency markets, particularly affecting ETH investors.

The warning comes from a prominent Ethereum supporter who has consistently expressed confidence in the cryptocurrency’s long-term growth prospects. Lee identified margin liquidations at South Korean brokerages as a major concern, given the country’s substantial cryptocurrency investor base.

He explained that financial losses in traditional markets could force investors to sell digital assets to meet financial obligations. “This major decline in Korean equities is likely spilling over into crypto,” Lee wrote.

Additionally, Lee described the potential market disruption as “short-term pain,” specifically highlighting Ethereum’s exposure to further selling pressure. His assessment points to possible financial contagion as investors holding multiple asset classes respond to mounting losses.

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South Korean Stock Market Plunges Over 6% Amid Semiconductor Sell-Off

South Korea’s benchmark KOSPI index plunged more than 6% on October 13, driven by widespread selling across technology and semiconductor stocks. Major companies, including Samsung Electronics and SK Hynix, faced considerable pressure as concerns surrounding semiconductor competition unsettled investors.

The market downturn followed reports that Chinese memory chip manufacturer ChangXin Memory Technologies had achieved significant technological progress. These developments raised concerns about stronger Chinese competition, particularly regarding memory chip prices and profit margins for established manufacturers.

Meanwhile, weakness spread to American semiconductor markets, where the Philadelphia Semiconductor Index fell 2.67% in its previous session. The Korea Exchange responded to the market disruption by activating emergency measures designed to control excessive trading volatility.

At approximately 9:48 a.m. local time, the exchange triggered a sell-side sidecar when KOSPI 200 futures dropped more than 5%. Despite this intervention, selling pressure persisted across the broader market, leaving South Korean equities under considerable strain.

Ethereum Faces Potential Liquidation Pressure as Financial Risks Spread

Lee’s warning highlights the potential connection between falling stock prices and cryptocurrency liquidations among investors exposed to both markets. South Korean investors facing margin calls could sell Ethereum holdings to secure additional funds and cover losses in traditional investments.

Such transactions could increase cryptocurrency selling pressure, particularly if financial difficulties spread across a larger group of leveraged investors. Significantly, Lee’s assessment identifies a potential risk rather than confirming that widespread Ethereum liquidations have already occurred.

The Fundstrat executive’s warning also underscores digital assets’ vulnerability to financial disruptions originating outside cryptocurrency markets. Overall, Ethereum faces potential short-term pressure from South Korea’s equity market decline, with further developments depending on investor liquidation activity.

Also Read: Crypto Market Turns Red as Bitcoin Falls Below $84K, XRP and Solana Lead Major Coin Losses