Bitcoin maintained its position above $75,000 on Friday despite heightened volatility in global equity markets, as a sharp decline in US technology stocks extended to Asia. The world’s largest cryptocurrency had stabilized following a 6.6% drop to $75,109 on Thursday, according to pricing on Bitstamp.
South Korean intervention amid equity turmoil
Asian equity markets faced significant declines at the close of the week, with South Korea’s KOSPI Composite Index falling over 8% just after opening. This triggered a 20-minute circuit breaker to halt trading temporarily. By the end of the day, the index trimmed losses but still finished 6% lower at 5,059.69 points, marking its lowest level since March 31.
KOSPI, the primary stock market index of South Korea, tracks large companies listed on the Korea Exchange. The drop followed steep sell-offs in the US technology sector the previous day, as the S&P 500 fell 4.4% and the Nasdaq Composite dropped 5.5%.
In response, Korea’s Deputy Prime Minister and Finance Minister Lee Hyoung-il led an emergency meeting to develop measures aimed at stabilizing markets. Starting Monday, brokerages in South Korea will be granted a three-month exemption from the usual requirement to maintain a 140% collateral ratio on margin loans. Authorities also indicated they are prepared to introduce additional interventions if market volatility continues.
A government source told local media that officials are closely monitoring “the expanding volatility in global stock markets following the US midterm elections.”
At the emergency meeting, South Korean officials stressed their commitment to preventing excessive forced selling and signaled further action if needed.
Mini dictionary: Circuit breaker – A temporary halt in trading on an exchange, triggered automatically when an index or stock drops rapidly by a set percentage. This mechanism aims to calm markets and prevent panic selling.
| Index | Thursday Close | Friday Change | Latest Value |
|---|---|---|---|
| KOSPI | – | -6% | 5,059.69 |
| S&P 500 | -4.4% | – | – |
| Nasdaq Composite | -5.5% | – | – |
| Bitcoin (Bitstamp) | -6.6% | – | $75,109 |
AI regulatory fears fuel US tech sell-off
Analysts attributed the sharp drops in US technology stocks to renewed concerns about the possibility of stricter regulation on artificial intelligence, especially after Democrats achieved further political gains in recent elections. The Philadelphia Semiconductor Index, which follows 30 leading semiconductor companies, slumped 12.2% on Thursday.
Market intelligence group The Kobeissi Letter referenced comments from Democratic Representative Yassamin Ansari, who advocated for a “pause on advanced AI development.” However, the group characterized the likelihood of the US formally banning AI as extremely low, stressing that such a move would risk ceding technological leadership to China.
The Kobeissi Letter wrote that “a ban of AI will not happen in the US (with near-certainty),” suggesting that such a scenario would jeopardize America’s global standing in the technology sector.
The service emphasized that losses remained concentrated in the technology sector, pointing out that the S&P 500’s decline would have been about 2.5% without the tech component.
Economist Mohamed El-Erian, President of Queens’ College, Cambridge and Chief Economic Advisor at Allianz, noted that the United States must pursue a balanced approach to AI regulation. He highlighted the nation’s “let it rip” strategy in AI as favorable for innovation and security but acknowledged continued shortcomings in safety and public trust.
El-Erian also indicated that the reaction from both investors and the public reflects a combination of valid concerns and underlying information gaps.
Crypto correlation with equities persists
Recent market trends have shown a strengthening correlation between Bitcoin and major equity indices like the S&P 500. Previous analysis found that Democrat-controlled midterms under a Republican president have often been followed by positive equity performance. Bitcoin’s ongoing price action above the 50-week simple moving average suggests that the cryptocurrency is remaining resilient amid stock market volatility.
