Last Tuesday, South Korean President Yoon Suk Yeol surprised the country by declaring martial law. The president’s surprise announcement, which was later canceled, created political chaos and shook markets.
South Korea’s stock market fell Wednesday morning and the benchmark Kospi index fell 2% due to the uproar. Even before the markets opened, the country’s deputy minister of economy and finance said the government was ready to inject nearly $7 billion to stabilize the market.
As Kospi’s top stocks fell, SoKor’s crypto trading volume soared to $34.2 billion on popular exchanges such as Bithumb, Upbit, Gopax, and Korbit. Upbit processed most crypto transactions worth $27.25 billion, underscoring its dominance in the country’s crypto market.
The price of Bitcoin also briefly fell on Korean crypto exchanges due to a lack of liquidity, highlighting the vulnerability of the country’s crypto market.
Volatile trading session
South Korean stocks reacted negatively to the president’s about-face. The country’s vice president for economy and finance announced that the administration was prepared to deploy up to $7 billion to deal with possible market chaos.
On Wednesday, popular stocks in the country, such as Samsung and LG Energ Solution, fell 1% and 2.8%, respectively.
The country’s crypto market also saw a surge in activity, nearly doubling the record of $18 billion set on December 2. According to South Korean cryptocurrency news outlet KWNews, this is the highest daily cryptocurrency trading total for the year.
BREAKING: South Korean parliament votes 190-0 to lift martial law pic.twitter.com/08Sf0HHZ0C
– BNO News (@BNONews) December 3, 2024
Martial law swing wreaks havoc on crypto market
The country’s crypto sector also reacted negatively to last Tuesday’s political chaos. During the 6 hours of martial law, the price of Bitcoin fell to 88 million won or $62,182 on popular crypto exchanges, reflecting a massive sell-off. While many holders and traders panicked 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Just hours after declaring martial law, the president immediately rescinded the order, which helped stabilize markets.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 went to work and filed treason charges against the president, with some campaigning for his impeachment.
Political instability in South Korea may impact liquidity
Although the price of Bitcoin and the entire crypto 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, can impact crypto prices.
South Korea’s political drama has also attracted the attention of crypto betting markets and crypto commentators. On Polymarket, the odds of a $500,000 bet on President Yoon’s early exit peaked at 78% before stabilizing at 47%.
Featured image from Pexels, chart from TradingView
