South Korea witnessed a dramatic rise in cryptocurrency trading volumes, reaching $34.2 billion in 24 hours amid a political crisis and emergency martial law declared by President Yoon Suk-yeol.
Impact of Martial Law on the Crypto Market
President Yoon's decision to declare martial law on December 2 heightened uncertainty, leading to panic selling of cryptocurrencies. The announcement was made in response to 'anti-state' forces allegedly targeting the opposition party. Yoon justified martial law as necessary for protecting the nation's democracy and safety.
Sharp Price Drop and the 'Kimchi Discount'
Cryptocurrency prices on South Korean exchanges plummeted, resulting in the 'kimchi discount,' with local exchange prices falling significantly below global levels. Bitcoin dropped by 33% on Upbit to 61.2 million won, while globally it remained around $95,000. Ethereum and XRP also faced significant drops, though TRON (TRX) experienced a dramatic increase in trade and market capitalization.
Political Backlash and Market Recovery
The situation shifted when President Yoon's cabinet repealed the martial law decree under pressure from lawmakers. As the political climate stabilized, crypto prices began to recover, with Bitcoin and Ethereum narrowing the gap with global markets.
Despite the initial shock and price decline, the stabilization of the political situation in South Korea helped the cryptocurrency market to recover, highlighting the importance of political stability for financial markets.
