Last Tuesday, South Korean President Yoon Suk Yeol surprised the country by declaring martial law. The President’s unexpected announcement, which was later reversed, created political chaos and rattled the markets.
South Korea’s stock market fell in Wednesday morning trading with the benchmark Kospi down 2% due to the turmoil. Even before the markets opened, the country’s deputy minister of economy and finance said that the government is ready to invest nearly seven billion dollars to stabilize the market.
As Kospi’s major shares fell, SoKor’s crypto trading volume rose to $34.2 billion on popular exchanges such as Bithumb, Upbit, Gopax, and Korbit. Upbit processed the most crypto transactions worth $27.25 billion, underscoring its dominance in the country’s crypto market.
The price of Bitcoin also dipped briefly on Korean crypto exchanges due to a lack of cash, highlighting the vulnerability of the country’s crypto market.
Dynamic Trading Session
South Korean stocks reacted negatively to the president’s flip-flop. The country’s vice chairman of economy and finance announced that the administration is ready to spend up to 7 million dollars to deal with the chaos in the markets.
In Wednesday trading, the country’s preferred shares, such as Samsung and LG Energ Solution, fell by 1% and 2.8%, respectively.
The country’s crypto market also saw a surge in activity, nearly doubling the $18 billion record set on December 2. According to South Korean cryptocurrency news outlet KWNews, this was the highest one-day crypto trading volume in a year.
BREAKING: South Korean 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 turmoil last Tuesday. During the 6-hour martial law, the price of Bitcoin dropped to 88 million won or 62,182 dollars on the popular crypto exchange, indicating a sell-off. As many owners and sellers are afraid to sell BTC and crypto, some exchanges have experienced outages.
Hours after declaring martial law, the president quickly lifted the order, which helped stabilize markets. The opposition groups in the country immediately began to work and filed charges of treason against the president, while others campaigned for his removal from office.
South Korea’s Political Instability Can Have Positive Effects
Although the price of Bitcoin and the crypto market as a whole stabilized quickly 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 affect the prices of cryptos.
South Korea’s political drama has also attracted the attention of crypto betting markets and crypto analysts. At Polymarket, the odds of a $500k bet on President Yoon’s early exit peaked at 78% before settling at 47%.
Featured image from Pexels, chart from TradingView