April 27, 2024

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(Yonhap)

Bitcoin, the leading cryptocurrency, continues its robust performance by hitting successive all-time highs, marking a trend of strength. 

However, as the domestic stock market remains in a state of stagnation, there are indications that substantial idle funds in the market have significantly withdrawn.

According to statistics from the Korea Financial Investment Association on Saturday, investor deposits stood at 53.48 trillion won ($54.24 billion) as of Thursday. Compared to the previous four days (57.885 trillion won), the amount has fallen by more than 4.4 trillion won in 10 days.

Investor deposits are one type of standby funds that investors leave in their broakge accounts to buy stocks, or use money they don't find after selling stocks to enter the stock market.

Another standby, money market funds (MMFs), also saw a weekly outflow of 270 billion won ($175 million) from the previous day, Yonhap News reported, citing information from FnGuide.

MMFs invest primarily in short-term instruments such as Treasury bills and commercial paper (CP) with short maturities, and are classified as standby funds because they can be redeemed at any time while earning some return for investors.

As the Korean stock market has been stuck in a range and struggling to gain momentum, in contrast to the recent bullishness of the cryptocurrency market, including bitcoin, some analysts have speculated that the stock market's standby funds may have shifted to the coin market.

The price of bitcoin has been hitting new highs every day since breaking through the $70,000 mark for the first time this month. On Thursday, it reached $73,797.97 (98.2 million won) as of 4:00 p.m. (local time), setting a new all-time high once again.

On the other hand, the KOSPI briefly broke above the 2,700 mark for the first time in a year and 11 months on tThursday, raising expectations of a breakout, but the next day, it slumped back to the 2,660s due to heavy foreign selling. On the previous day, the KOSPI closed at 2,666.84, down 1.91 percent from the previous day.

Recently, key inflation data from the US, ranging from the Consumer Price Index (CPI) to the Producer Price Index (PPI) for February, exceeded market expectations, raising concerns about inflation.

This has weighed on local equity markets as the perception that a rate cut, which is predicated on slowing inflation, could be delayed, and increased caution ahead of the US Federal Reserve's March Federal Open Market Committee (FOMC) meeting next week.

In addition, the 'value-up frenzy' that led to the recent rebound in the Korean stock market has fizzled out, leaving a momentum vacuum and leading to rotational selling across sectors and stocks.

By Investor Team (investor@heraldcorp.com)