As a seasoned researcher with a penchant for observing global financial markets, I find it fascinating to witness the dynamic interplay between politics and finance, particularly in South Korea. The recent events surrounding President Yoon Suk Yeol’s declaration and subsequent reversal of martial law have provided an intriguing case study.
On Tuesday last week, President Yoon Suk Yeol of South Korea took everyone by surprise when he declared martial law. However, the President’s unexpected proclamation, which was later rescinded, led to significant political turmoil and market instability.
On Wednesday morning, South Korea’s stock market experienced a decline, with the benchmark Kospi dropping by approximately 2% due to market turbulence. Before trading began, the country’s vice minister of economy and finance announced that the government was prepared to inject nearly $7 billion into the market to maintain stability.
Amidst a downturn in major Kospi stock prices, I observed an unexpected surge in South Korea’s cryptocurrency trading volume. This surge reached an impressive total of $34.2 billion across well-known exchanges like Bithumb, Upbit, Gopax, and Korbit. Among these platforms, it was Upbit that handled the lion’s share of transactions, processing a staggering $27.25 billion worth of cryptocurrency trades. This significant figure underscores Upbit’s prominent position within South Korea’s crypto market.
As a researcher examining the cryptocurrency market, I observed that the value of Bitcoin momentarily plummeted within South Korean cryptocurrency exchanges, which suggests a potential lack of liquidity. This incident underscores the potential vulnerabilities inherent in their digital currency market.
Volatile Trading Session
In simpler terms, when the South Korean president changed his stance (flip-flop), the stock market reacted unfavorably. However, in an attempt to calm market turbulence, the country’s vice chair for economy and finance declared that the administration is prepared to invest up to $7 billion if needed.
On a trading day this week, I noticed a dip in the value of some well-known stocks from my home country. Specifically, shares of Samsung and LG Energy Solution declined by approximately 1% and 2.8%, respectively.
On December 2nd, the country’s cryptocurrency market reached an all-time high of $18 billion in a day, but on a specific day this year, it saw a significant increase nearly doubling that record, as reported by South Korea’s cryptocurrency news outlet KWNews. This marked the peak daily crypto trading volume for 2021.
BREAKING: South Korea’s parliament votes 190-0 to lift martial law
— BNO News (@BNONews) December 3, 2024
Martial Law Flip-Flop Sows Crypto Market Chaos
Last Tuesday’s political turmoil also had a detrimental impact on the nation’s cryptocurrency market. During the 6-hour period of martial law, the price of Bitcoin dropped significantly on major cryptocurrency platforms to approximately 88 million won ($62,182). This steep decline suggests a mass selling-off of Bitcoin and other cryptos. As holders and traders grew anxious and chose to sell their BTC and crypto, some exchanges experienced temporary outages.
Shortly following the implementation of martial law, the president swiftly revoked the decree, contributing to market stability. In response, the opposition promptly initiated accusations of treason against the president, while some advocated for impeachment proceedings.
South Korea Political Instability Can Impact Liquidity
Despite Bitcoin’s price and the broader crypto market showing signs of recovery on Wednesday, the ongoing political crisis serves as a reminder of how susceptible a nation’s markets are to liquidity disruptions. Any political upheaval, such as the declaration of martial law, has the potential to influence cryptocurrency prices.
The political turmoil in South Korea has not gone unnoticed by cryptocurrency betting platforms and analysts. On Polymarket, wagers predicting the early resignation of President Yoon reached as high as 78%, peaking before eventually settling at 47%.
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2024-12-06 08:41