Last Tuesday, South Korean President Yoon Suk Yeol surprised the country by declaring martial law. The president’s surprise announcement, later reversed, sparked political chaos and shook markets.
South Korea the stock market fell Wednesday morning trading, with the Kospi benchmark falling 2% in the confusion. Even before the markets opened, the Deputy Minister of Economy and Finance stated that the government was ready to allocate almost USD 7 billion to stabilize the market.
As Kospi’s core stocks fell, SoKor’s cryptocurrency trading volume rose to $34.2 billion on popular exchanges such as Bithumb, Upbit, Gopax, and Korbit. Upbit processed the majority of cryptocurrency transactions worth $27.25 billion, highlighting its dominance in the domestic cryptocurrency market.
Bitcoin price also briefly saw a decline in Korean cryptocurrency exchanges due to lack of liquidity, highlighting the vulnerability of the country’s cryptocurrency market.
Volatile trading session
South Korean stock exchanges reacted negatively to the president’s flip-flop. The country’s vice president for economy and finance announced that the administration is ready to allocate up to $7 billion to apply the potential market chaos.
On Wednesday’s stock exchanges, shares of popular companies in the country such as Samsung and LG Energ Solution fell by 1% and 2.8%, respectively.
The country’s cryptocurrency market also saw a surge in activity, nearly doubling the $18 billion record set on December 2. According to a South Korean cryptocurrency news site KWNewsthis was the highest single-day cryptocurrency trading total this year.
BREAKING: South Korea’s parliament lifted martial law by a 190-0 vote pic.twitter.com/08Sf0HHZ0C
— BNO News (@BNONews) December 3, 2024
Martial law Flip-Flop is causing chaos in the cryptocurrency market
The the country’s crypto sector also reacted negatively to the political chaos last Tuesday. During the 6-hour martial law, Bitcoin’s price fell to 88 million won, or $62,182, on popular cryptocurrency exchanges, reflecting a sell-off. As many holders and traders panicked and wanted to sell BTC and cryptocurrencies, some exchanges experienced outages.
Just hours after declaring martial law, the president immediately rescinded the order, which helped stabilize markets. The country’s opposition immediately got to work charging the president with high treason, with some of them calling for his impeachment.
Political instability in South Korea may impact liquidity
Although the price of Bitcoin and the overall cryptocurrency market immediately stabilized on Wednesday, the political crisis highlighted the vulnerability of the country’s markets to liquidity shocks. Any political instability, such as the declaration of martial law, could impact cryptocurrency prices.
South Korea’s political drama has also attracted the attention of betting markets and cryptocurrency commentators. On the Polymarket platform, chances for a bet worth PLN 500,000. dollars for President Yoon’s early departure peaked at 78% before stabilizing at 47%.
Featured image from Pexels, chart from TradingView
