South Korea Crisis Sparks $34.2 Billion Explosion In Crypto Market
Source: Bitcoinist
Last Tuesday, South Korea President Yoon Suk Yeol surprised the country by declaring a martial law. The President’s surprise announcement, later reversed, created political chaos and rattled the markets.
South Korea’s stock market fell in Wednesday morning trading and the benchmark Kospi dipped by 2% as a result of the tumult. Even before the markets opened, the country’s vice minister for economy and finance stated that the government was ready to infuse almost $7 billion to stabilize the market.
As major Kospi stocks fell, SoKor’s crypto trading volume surged to $34.2 billion across popular exchanges like Bithumb, Upbit, Gopax, and Korbit. Upbit processed most crypto transactions worth $27.25 billion, underscoring its dominance in the country’s crypto market.
Bitcoin’s price also briefly dipped in Korea’s crypto exchanges due to a lack of liquidity, highlighting the vulnerability of the country’s crypto market.
Volatile Trading Session
South Korean stocks responded negatively to the president’s flip-flop. The country’s vice chair for economy and finance announced that the administration is ready to deploy up to $7 billion to address a potential market chaos.
On Wednesday trading, the country’s popular stocks, like Samsung and LG Energ Solution, dropped by 1% and 2.8%, respectively.
The country’s crypto market also saw a surge in activities, nearly doubling the $18 billion record set on December 2nd. According to South Korea’s cryptocurrency news outlet KWNews, this was the highest single-day total for crypto trading for the year.
BREAKING: South Korea’s parliament votes 190-0 to lift martial law pic.twitter.com/08Sf0HHZ0C
— BNO News (@BNONews) December 3, 2024
Martial Law Flip-Flop Sows Crypto Market Chaos
The country’s crypto sector also reacted negatively to the political chaos last Tuesday. During the 6-hour martial law, Bitcoin’s price dipped to 88 million won or $62,182 in popular crypto exchanges, reflecting a sell-off. As many holders and traders panicked to sell BTC and crypto, some exchanges have encountered outages.
Just hours after declaring martial law, the president immediately rescinded the order, which helped stabilize the markets. The country’s opposition immediately set to work and filed charges of treason against the president, with some campaigning for impeachment.
South Korea Political Instability Can Impact Liquidity
Although Bitcoin’s price and the overall crypto market immediately stabilized Wednesday, the political crisis highlighted the vulnerability of the country’s markets to liquidity shocks. Any political instability, like the declaration of martial law, can impact cryptos’ prices.
South Korea’s political drama has also caught the attention of crypto betting markets and crypto commentators. On Polymarket, the odds of a $500k bet on President Yoon’s early exit reached a high of 78% before stabilizing at 47%.
Featured image from Pexels, chart from TradingView
