Scenes from South Korea's retail investors: 14 million "ants" diving into cryptocurrencies and leverage
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Scenes from South Korea's retail investors: 14 million "ants" diving into cryptocurrencies and leverage
Just to buy a house of their own.
Navigating Web3 tides with focused insightsBy: Sangmi Cha, Haram Lim
Translated by: Luffy, Foresight News
Tony Kim, a manager at a textile company in Seoul, goes all-in whenever he likes a stock.
The 34-year-old Tony Kim has never held two stocks simultaneously in his 140 million won (approximately $98,500) investment portfolio. "Koreans, including myself, are obsessed with that dopamine rush—it feels like it's coded into our genes," said the father of two.
Tony Kim
For many retail investors, such behavior might seem reckless or indicative of extraordinary stress tolerance. But among South Korea’s roughly 14 million retail investors—often referred to as the “ant colony”—this is merely a reflection of their intense desire for returns and rising risk appetite.
This hunger is driving funds into investment accounts at near-record speed. Over the past five years, Korean retail investors have tripled margin loan balances through leveraged bets. They’ve flooded into highly speculative leveraged and inverse exchange-traded funds (ETFs), accounting for 40% of total assets in some U.S.-registered leveraged ETFs. Meanwhile, trading volume in high-risk cryptocurrencies has surged to record highs.
The frenzied trading by retail investors is not only reshaping markets but also turning them into a politically influential force. Their collective power and anxiety have become so strong that they recently forced the South Korean government into an unprecedented policy reversal.
As global markets reach historic highs fueled by the artificial intelligence infrastructure boom, heavily leveraged Korean retail investors find themselves in an extremely vulnerable position. Should market sentiment suddenly shift, speculative positions could collapse instantly, magnifying losses.
Such a turning point occurred just over a week ago. Escalating U.S.-China tariff tensions triggered a cryptocurrency crash, wiping out numerous altcoins overnight. Korean retail investors are known for aggressively betting on small-cap tokens. These highly volatile assets account for over 80% of total trading volume on Korean cryptocurrency exchanges—starkly contrasting with global platforms where Bitcoin and Ethereum typically make up more than 50% of trading volume.
For many Korean retail investors, all these high-risk moves serve one goal: accumulating enough wealth in a fiercely competitive environment to buy their own home. Koreans use the term "jeon-hon" (borrowed soul) to describe this struggle, capturing precisely the emotional and financial pressure behind the dream of homeownership.
Recent government policies have further intensified retail investors’ risky behavior. Mortgage lending limits and rental market reforms introduced by the new administration under President Lee Jae-myung have driven up rents, making home ownership even more unattainable. Last week, the government rolled out additional measures to cool down the overheated real estate market, including tightening loan limits in greater Seoul and lowering loan-to-value ratios for mortgaged properties.
"Our parents' generation built wealth from the real estate红利 of the Han River Miracle—we don’t have that luck," said 36-year-old Kim Soo-jin, a former business consultant who left her job and used her entire severance package to invest in cryptocurrencies. "In my circle, about 30 people have already 'graduated'—meaning they earned enough and exited high-risk investments. I hope one day I can 'graduate' too."
The Han River in Seoul
Buyer Beware
The retail investor trend of chasing momentum is evident across markets. Since Donald Trump won the U.S. presidential election last year and began his second term, trading volume on local Korean cryptocurrency exchanges has skyrocketed, at one point reaching 80% of the turnover of Korea’s benchmark Kospi index. Stablecoins pegged to fiat currencies have also drawn massive inflows from retail investors.
Investors are also rushing into leveraged and inverse ETFs, which use derivatives to amplify gains (and losses) by two to three times. Due to strict domestic regulations in Korea—including mandatory simulation trading and high margin requirements—retail investors are increasingly turning to overseas markets, becoming major participants in the global leveraged ETF space.
Comparison of trading volume between Korean cryptocurrency exchanges and the Kospi index
The high-risk behavior of Korean retail investors not only threatens household savings but also puts pressure on the financial system, endangering overall economic stability. As investors flock to high-return, high-risk assets, traditional financial instruments are losing appeal, narrowing banks’ funding channels. In just six weeks after July this year, major Korean banks lost nearly 40 trillion won (about $28.1 billion) in deposits.
"In Korea, investing is often treated like gambling rather than long-term planning—almost as brutal as 'Squid Game,'" said Choi Jae-won, economics professor at Seoul National University. "Once the bubble bursts and individuals face negative wealth shocks, problems escalate: personal credit crises emerge, consumption declines, and ultimately the entire national economy suffers."
Regulators are equally concerned. "We worry that if the market crashes, it could severely impact retail investors’ assets and the broader economy," said Lee Yoon-soo, standing commissioner at Korea’s Financial Services Commission.
Psychiatrists point out that the psychological toll of high-risk investing is intensifying. "Without inherited wealth, owning an apartment in Gangnam (Seoul’s affluent district) is a fantasy," said Park Jong-seok, who lost around $250,000 in investments and now runs a clinic specializing in treating investment addiction. "In this anxious society, even knowing the risks, people are drawn to high-risk investments. It feels like the entire system pushes them forward, trapping them in a cycle of anxiety-driven investment addiction."
Park Jong-seok
"Wiped Out Overnight"
For some, the scars of investment collapse never fully heal. Han Jung-hoon, 35, once experienced the euphoria of seeing his cryptocurrency wallet balance surge 30-fold to 6.6 billion won—but in 2022, the Luna crash erased it all.
TerraUSD was a failed stablecoin project launched by Korean entrepreneur Do Kwon. In August this year, Do Kwon pleaded guilty to fraud charges. The project’s collapse wiped out approximately $40 billion in market value within days.
"My 6.6 billion won profit disappeared overnight—I ended up recovering less than 6 million won," said Han Jung-hoon.
The crash completely changed his life. While not entirely abandoning cryptocurrency, he has stepped away from high-risk investments and turned instead to meditation. He even launched a YouTube channel sharing breathing techniques he enjoys. Today, he lives on remote Jeju Island and occasionally travels to Bali for meditation retreats.
Han Jung-hoon
Even so, bold tales of investment success continue to flood social media platforms like YouTube. Stories of couples investing their entire savings in Bitcoin, or 27-year-old students earning tens of thousands of dollars monthly through high-frequency trading—these narratives serve as bait drawing investors like Tony Kim.
Tony Kim currently holds full positions in stocks like Nvidia and Tesla. "I’ve made money with leverage—the feeling of easy gains is addictive," he recalled earning "$1,300 from $900 overnight," only to lose all profits within three days. "You keep chasing that rush of sudden wealth."
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