Major Exit of Korean Investors from Tesla
Korean retail investors have significantly supported Tesla in past years, driving its stock market growth. In August 2025, they withdrew an unprecedented $657 million from Tesla stock, marking the highest monthly outflow in over two years.
The investment withdrawal includes leveraged products associated with Tesla, such as the 2x leveraged ETF, TSLL, which faced outflows of $554 million in August 2025, the highest since early 2024.
This sell-off by retail investors, once key to Tesla’s growth, indicates a notable drop in enthusiasm. It highlights a shift in investor confidence, signaling waning trust in the company’s prospects and a rising interest in alternative investments, particularly in US-based cryptocurrency firms.
Despite this, Korean investors continue to hold approximately $21.9 billion in Tesla shares, affirming it as their largest foreign equity investment. This ongoing commitment underscores growing concerns regarding Tesla’s future trajectory.
Did you know? Exchanges based in South Korea, like Upbit and Bithumb, handle billions daily, positioning Seoul as a center for global crypto liquidity.
Reasons Behind Korean Investors’ Exit from Tesla
Korean investors have pulled out of Tesla after years of loyalty, driven by concerns regarding the company’s direction and various factors.
- Unfulfilled Promises: Tesla has regularly fallen short on ambitious deadlines; for example, Musk promised 1 million robotaxis by 2020, and a fully functional self-driving capability, yet years later, the technology is still in beta. Additionally, the long-awaited Cybertruck only began deliveries in late 2023, years behind schedule, and the next-gen Roadster, originally set for 2020, may now launch in 2025.
- Political Fallout: Musk’s involvement in US politics, including conflicts with President Donald Trump and controversial social commentary, has tarnished his credibility. His quick entry and exit from government further impacted his reputation.
- Declining Sales: In Q2 2025, Tesla’s global deliveries dropped by 13%-13.5% year-over-year, with 384,122 units delivered compared to 443,956 in Q2 2024. July 2025 witnessed a 40% drop in European sales, with only 8,800 cars delivered, while year-to-date sales decreased by 34%, reducing market share in EVs from 11% to 5%.
- Increased Competition: Companies like BYD, Nio, and XPeng from China, along with European competitors like Volkswagen, are offering more affordable, feature-rich EV alternatives, diminishing Tesla’s market position. For instance, BYD tripled its July sales in China to roughly 13,500 units, in contrast to Tesla’s 8,800. XPeng delivered 37,709 units in August 2025, a 168.7% year-on-year increase, while Nio also achieved record deliveries, selling 31,305 vehicles, up 55.2% YoY. BYD led with 373,626 EVs sold in August and more than 1.1 million in Q2 alone, nearly three times Tesla’s Q2 deliveries.
- Leadership Instability: Musk’s unexpected decisions, such as purchasing Twitter (now X), prioritizing AI ventures over EVs, and abrupt management changes have created uncertainty about Tesla’s focus.
Did you know? Nearly one in five South Koreans now invests in digital assets, with adoption exceeding 25% among individuals aged 20-50.
Transition of Korean Investors from Tesla to Cryptocurrency
South Korean retail investors, known for their savvy in global stock investments, are now focusing on cryptocurrency-related stocks. This trend has become evident as of September 2025, marking a new phase for Korean investments abroad.
By mid-2025, South Korean investors had funneled over $12 billion into US-listed cryptocurrency companies. The speed and scale of this investment wave highlight how Korean traders, often labeled “fearless retail,” are viewing cryptocurrency as both a growth avenue and a hedge against diminishing confidence in traditional stocks like Tesla.
August 2025 exemplified the fervor of this transition. Investors allocated $426 million to Bitmine Immersion Technologies, closely tied to Ethereum’s expansion. Circle, the issuer of USDC, attracted $226 million, while Coinbase, the largest cryptocurrency exchange in the US, drew $183 million in Korean investments.
Riskier products also saw significant interest, as a 2x leveraged Ether ETF pulled in $282 million that month, reflecting retail investors’ eagerness for greater exposure to the sector.
Overall, this wave of Korean retail investment into cryptocurrency is likely not merely speculative. It appears to signal a lasting change in investor preferences that could impact how Asian capital interacts with global markets and further mainstream cryptocurrency assets.
Reasons Behind South Korea’s Shift Toward Crypto
The movement in South Korea from traditional equities to cryptocurrency assets is the result of various social, regulatory, and economic factors. Together, these factors elucidate why the nation has become one of the most dynamic retail markets for digital assets.
Demographics and Adoption
The appeal of cryptocurrency in South Korea stems from its demographics. About 20% of South Koreans now hold digital assets, rising to 25%-27% among those aged 20-50.
This age group possesses the most financial capability and inclination to take risks. They have grown up in a digital environment, adept at mobile payments and online trading, with a cultural tendency toward speculative investments.
This unique blend of technological familiarity and risk appetite makes cryptocurrency a natural fit for their financial behaviors.
Regulatory Support
Once a barrier to crypto growth, regulation in South Korea is evolving into a supportive framework. The implementation of the Virtual Asset User Protection Act (VAUPA) in 2024 aims to protect investors and prevent unfair trading practices.
Moreover, plans for the Digital Asset Basic Act (DABA) aim to establish a comprehensive regulatory structure for all virtual assets.
Economic Environment
South Korea’s economic landscape is increasingly favorable for cryptocurrency adoption. Persistently low interest rates and limited domestic investment options push investors towards higher-yield alternatives such as digital assets.
Additionally, the slowdown in traditional sectors like automotive and manufacturing pushes investors to seek alternative returns. A weakening won, along with significant capital movements towards dollar-backed stablecoins, further incentivizes crypto investments.
Did you know? The Korean won consistently ranks among the top three fiat currencies traded against Bitcoin (BTC) globally.
How South Korea’s Cryptocurrency Investments are Influencing Global Market Trends
With an estimated GDP of around $1.87 trillion in 2024, South Korea has emerged as a pivotal player in global cryptocurrency markets.
Korean investors, typically recognized for high-volume trading, are channeling billions from traditional stocks like Tesla into cryptocurrency-related stocks and ETFs.
This surge of capital is enhancing liquidity for US-based exchanges, mining firms, and tokenized financial products, thus elevating the global profile and respect for digital assets.
South Korean investors are gravitating towards leveraged products, such as 2x Ether (ETH) ETFs, which are intensifying short-term market volatility and influencing price dynamics globally. Furthermore, South Korea’s transition is likely to shape how both institutional and retail investments evolve worldwide.
Fund managers might tailor offerings to satisfy Korean demand. As a result, South Korean retail traders are exporting their speculative energy, producing opportunities and instability alike. Their dedication to cryptocurrencies is transforming global capital flows and investment behaviors, prompting global regulators to consider Seoul’s policies as potential frameworks.
