Last Tuesday, South Korean President Yun Seok-Yeol surprised the country by declaring martial law. The president's sudden announcement was later retracted, causing political turmoil and roiling markets.
The Korean stock market fell in Wednesday morning trading, and the Kospi index also fell by 2% due to the turmoil. Even before the market opened, the country's deputy economy and finance minister said the government was ready to inject almost $7 billion to stabilize the market.
SoKor's crypto trading volume surged to $34.2 billion across popular exchanges such as Bithumb, Upbit, Gopax, and Korbit as the main Kospi stock fell. Upbit processed most crypto transactions worth $27.25 billion, underscoring the country's dominance in the crypto market.
Bitcoin prices temporarily fell on South Korean virtual currency exchanges due to a lack of liquidity, highlighting the vulnerability of the country's virtual currency market.
Volatile trading session
South Korean stocks reacted negatively to the president's reversal. The country's vice president for economic affairs and finance announced that the administration is prepared to spend up to $7 billion to deal with potential market disruptions.
Bitcoin is currently trading at $103,431. Chart: TradingView
In Wednesday trading, the country's popular stocks such as Samsung and LG Energy Solutions fell 1% and 2.8%, respectively.
The country's cryptocurrency market has also seen a surge in activity, nearly doubling the $18 billion record set on December 2nd. According to South Korean cryptocurrency news outlet KWNews, this was the highest single-day total for cryptocurrency transactions this year.
Breaking news: South Korean parliament votes 190-0 to lift martial law pic.twitter.com/08Sf0HHZ0C
— BNO News (@BNONews) December 3, 2024
Cryptocurrency market falls into turmoil due to reversal of martial law
The country's cryptocurrency sector also reacted negatively to last Tuesday's political turmoil. During the six-hour period of martial law, the price of Bitcoin on popular cryptocurrency exchanges reflected the decline, dropping to 88 million won or $62,182. Some exchanges suffered outages as many holders and traders panicked to sell their bitcoins and cryptocurrencies.
Just hours after imposing martial law, the president quickly rescinded the order, helping to stabilize the market. The country's opposition quickly sprung into action, charging the president with treason and some campaigning for his impeachment.
Political instability in South Korea could impact liquidity
Bitcoin prices and the overall cryptocurrency market quickly stabilized on Wednesday, but the political crisis has highlighted the vulnerability of the country's market to liquidity shocks. Political instability, such as the declaration of martial law, can affect the price of cryptocurrencies.
The Korean political drama has also attracted the attention of crypto gambling markets and crypto commentators. At Polymarket, odds on a $500,000 bet on President Yoon's early exit reached a high of 78% and then stabilized at 47%.
Featured images from Pexels, charts from TradingView
