Bitcoin Takes Flight... Related Stocks 'Fluctuate'

Woori Technology Investment Doubles
Wizit Hits Upper Limit Amid Volatile Trading Warning

[Asia Economy Reporter Oh Ju-yeon] As the virtual currency Bitcoin surged to 20 million won, the price level during the 'coin frenzy' period from 2017 to early 2018, Bitcoin-related stocks in the domestic stock market are also fluctuating. Some stocks show double-digit volatility within a single day solely based on Bitcoin prices, raising concerns about cautious investment.

According to the Korea Exchange on the 19th, Woori Technology Investment's stock price more than doubled in the past month. Woori Technology Investment is considered a representative Bitcoin-related stock as it owns shares in Dunamu, which operates the virtual currency exchange Upbit. The stock price, which was 2,260 won at the close on October 16, rose 134.07% to 5,290 won on the 18th.

Bitcoin's price was around 8 million won until early this year. In March, when the stock market plummeted due to the spread of the novel coronavirus (COVID-19), Bitcoin prices also fell, dropping to the 6.3 million won range at one point. However, it surpassed 10 million won starting in July and broke through 13 million won from October. Since then, the price has jumped in increments of one million won, exceeding 20 million won on the 18th.

The prices of Bitcoin-related stocks in the domestic stock market followed this trend. Witzit closed at the daily upper limit on the 18th, when Bitcoin hit 20 million won. Witzit has Omnitel as a subsidiary, which owns shares in Bithumb Korea, the operator of the virtual currency exchange Bithumb. Witzit's stock price was 691 won at the close on the 2nd, rose 23% intraday on the 6th, and maintained a price in the 700 won range. After closing at the daily upper limit of 991 won the previous day, it surged 26.64% intraday on the 18th to reach 1,255 won. In less than a month, the stock price nearly doubled. Bident, which also holds shares in Bithumb Korea, surged 24% intraday on the 18th. On the same day, other Bitcoin-related stocks such as Atinum Investment (6.15%), Danal (5.18%), SCI Evaluation Information (3.58%), and SBI Investment (2.96%) also rose together.

Recently, these stocks have surged simply based on Bitcoin prices and future expectations, so investors should be cautious as hasty investments may lead to significant losses. It is common for stocks to surge double digits intraday and then give back most of the gains, ending with single-digit increases. Investors who jumped in during the steep rise may experience negative returns even if the stocks close higher.

For example, Atinum Investment's stock price rose as high as 3,140 won intraday on the 18th, up 20.77% from the previous trading day, but then fell to 2,760 won due to heavy selling. Although it closed with a 6% increase from the previous day, investors who bought in the 3,000 won range suffered losses close to 10%.