A steep selloff in South Korean stocks, led by semiconductor shares, could spread short-term selling pressure to the crypto market, according to a market analysis.

Tom Lee, co-founder of global investment research firm Fundstrat, wrote in a post on X on October 12 that “there is a high chance the large decline in the South Korean stock market spills over into the crypto market.”

Lee pointed to South Korean investors’ sizable crypto holdings. If the domestic stock slump triggers forced liquidation in brokerage accounts, including margin calls, investors may seek to raise cash by selling digital assets. Sales could climb further if investors use crypto to cover stock losses or post additional collateral, adding broader downside pressure across the market.

The Kospi was down more than 4% from the previous session as of 10:16 a.m. Korea time on October 13, falling to the 6,050 level. The move appeared to reflect rising concern about intensifying competition in semiconductors after Chinese memory chipmaker ChangXin Memory Technologies, or CXMT, said it had made progress in DRAM technology development. Reports that CXMT plans to launch a next-generation server product using the technology within the year also weighed on semiconductor stocks in the US market overnight.

Still, Lee did not say the shock would necessarily lead to a prolonged downturn. He described the situation as “Short term pain,” suggesting the current market anxiety may prove temporary. His post also mentioned Ether.

The remarks amount to a warning that the plunge in South Korean equities could extend beyond stocks and increase volatility in crypto markets as well. Lee did not provide specific figures on forced liquidation or potential crypto selling.