ChainThink: Despite a Sharp Recovery, the Korean Market Struggles to Regain Previous Highs

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Market trends in the Korean stock market show a sharp rebound, but a return to previous highs remains uncertain. U.S. trader Ariel Hernandez noted that the collapse of the AI semiconductor sector in late July—driven by excessive leverage—triggered heavy liquidations and margin calls. He drew a parallel to the silver market earlier this year, where similar conditions resulted in increased seller supply and reduced buyer demand. With a poor risk-to-reward ratio, a full recovery could take months or even years.

ChainThink reports that on July 31, U.S. trader Ariel Hernandez posted that although the Korean stock market saw a significant rebound today, he believes it will be difficult for the market to quickly return to its levels from several weeks ago.

Ariel Hernandez said that at the end of July, South Korea's stock market saw a sharp decline in AI semiconductor stocks due to excessive leverage, followed by intense deleveraging, resulting in some traders being liquidated, making it difficult for the market to quickly form a sharp V-shaped recovery in the short term.

He cited the leveraged liquidation case in the silver market earlier this year, noting that after such trends emerge, there is typically an increase in seller supply and a decline in new buyers' willingness to leverage, making it take months or even years to approach the previous highs again.

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