South Korea’s Crypto Market Faces Turbulence Amid Martial Law Declaration
In an unexpected turn of events, the cryptocurrency market in South Korea experienced a significant downturn following the declaration of emergency martial law. This announcement triggered a wave of panic selling, leading to a drastic decrease in the value of most digital currencies, plummeting to their lowest levels in months. The aftermath of this turmoil saw local cryptocurrency exchanges witnessing a historic surge in daily trading volumes for two consecutive days, nearly doubling previous records.
Record-Breaking Crypto Trading Volumes in South Korea
On Tuesday, the announcement of martial law, a first in 44 years, sent shockwaves through the South Korean cryptocurrency exchanges. Major cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), and XRP experienced significant price drops. Bitcoin saw a sharp decline, losing approximately 33% of its value, trading at 88.26 million KRW, which is about $62,000 on the leading exchange, Upbit. Ethereum’s value fell by 38%, reaching 3.12 million KRW, or around $2,200. XRP suffered the most among the top cryptocurrencies, plummeting 60% from 4,000 KRW to a low of 1,623 KRW, equivalent to approximately $1.23.
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Amid this market upheaval, large investors, often referred to as “whales,” transferred over 163 million USDT to Upbit, seemingly in a bid to capitalize on bargain prices. The local exchanges recorded a substantial surge in trading volumes, marking their second record-breaking day within a week. Upbit reported an astonishing $27.25 billion in trading volume on December 3, closely followed by Bithumb with $6 billion, while Coinone and Korbit saw daily volumes of $531 million and $192 million, respectively. Collectively, these exchanges surpassed the previous day’s milestone by 88%, reaching over $34 billion in a single day.
Markus Thielen, founder of 10x Research, highlighted that the South Korean crypto market recorded its second-highest trading volume this year, exceeding the local stock market’s $14 billion by 22%. Retail trading, particularly in cryptocurrencies like XRP, experienced a dramatic increase, with XRP alone accounting for $6.3 billion in trading volume, followed by Dogecoin at $1.6 billion and Stellar at $1.3 billion. Thielen remarked that this surge is largely driven by retail traders taking advantage of momentum-driven trends.
The Brief Martial Law and Its Implications
President Yoon Suk Yeol’s televised announcement of martial law instigated public panic. He accused the opposition Democratic Party, which dominates the National Assembly, of aligning with North Korea and engaging in activities against the state. Martial law typically involves the replacement of civilian governance with military rule, imposing restrictions on freedoms and allowing significant shifts in governmental and judicial authority in accordance with related laws.
The President justified the martial law as a measure to “eradicate pro-North Korean forces and uphold the constitutional democratic order.” In response, Democratic Party leader Lee Jae-Myung vowed to annul the order, as permitted by Korean law, and dramatically showcased his defiance by climbing the National Assembly’s gates during a live stream. Under Korean law, the President is obliged to rescind martial law if the parliament requests it with a majority vote. Consequently, three hours post-announcement, 190 out of 300 lawmakers voted against martial law, prompting the President to lift the order shortly after.
Following this tumultuous period, the cryptocurrency market has rebounded, with most digital currencies trading above their pre-martial law levels. As of now, Bitcoin is valued at 135.2 million KRW, approximately $95,400, demonstrating a recovery from the recent instability.
