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The South Korean cryptocurrency market experienced significant turmoil following President Yoon Suk Yeol’s sudden declaration of martial law, creating a significant disparity between global and local cryptocurrency prices.
Bitcoin fell to as low as $79,000, while XRP traded at $1.89 on Upbit for more than an hour. Users flocked to exchanges to place buy orders and buy these Tokens at unprecedentedly low prices during the bull market.
A Brief Chaos in the Korean Cryptocurrency Market
The political crisis began when President Yoon declared martial law on Tuesday night, prompting military forces to attempt to enter parliament. Yoon justified the move as aimed at dealing with “pro-North Korean anti-state forces.”
The announcement threw the country’s economy into temporary chaos. The value of the Korean won has skyrocketed against the USD, opening up temporary arbitrage opportunities for USDT holders.
Bitcoin fell more than 30% on Korean exchanges, including Upbit, in Tuesday night’s trading, while falling just 2% on global markets. This sharp difference reflects both the panic selling by local traders and the nearly 3% increase in the USD/KRW exchange rate.
According to data from Lookonchain data. datamore than 163 million USD USDT poured into Upbit in just a short time, when many whales placed large orders to buy USDT. However, lawmakers, including his own party leader, Han Dong-hoon, immediately defied martial law to restore economic order.
The opposition in parliament proved effective, with lawmakers voting to reject the declaration of martial law early Wednesday morning. Markets stabilized after congressional intervention, with Bitcoin recovering to $95,167 at 17:30 UTC on Wednesday after surpassing the $96,000 mark.
Market Predicts Reaction
Political instability has spilled over into the cryptocurrency prediction market, as Polymarket launches one betting about President Yoon’s possible resignation. This market asks whether Yoon will leave the position between December 2 and 31, 2024. As of 17:30 UTC Wednesday, approximately $257,000 had been bet, with a 61% probability predicting Yoon would resign.
The event highlights the growing connection between political stability and the cryptocurrency market, especially in regions with high adoption like South Korea.
Throughout this year, the South Korean cryptocurrency market has seen increased activity from local users despite facing regulatory challenges. As TinTucBitcoin reported in October, the country recorded a record 67% increase in daily trading volume, reaching 6 trillion won.
However, cryptocurrency exchanges, especially Upbit, continuously face regulatory obstacles. In November, the financial watchdog discovered 600K potential KYC violations on the exchange. These violations have threatened Upbit’s license renewal despite the exchange’s commitment to transparency.
The regulator has also launched an investigation into Upbit’s possible monopoly on the Korean cryptocurrency market. The exchange was also accused of being involved in pump and dump schemes, taking advantage of regulatory loopholes and attracting scrutiny.
At the same time, nearly 35% of cryptocurrencies on various exchanges in South Korea were delisted, with half lasting less than two years. These delistings caused huge losses to investors due to reduced liquidity and sharp drops in the price of inaccessible currencies.
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