South Korea crisis sparks crypto surge
|South Korea’s brief martial law declaration caused market chaos, plunging stocks and sparking a record $34.2B crypto trading surge.
South Korea faced political turmoil last Tuesday when President Yoon Suk Yeol briefly declared martial law, sending shockwaves through the country. Although the decision was quickly reversed, it triggered widespread uncertainty, impacting both the stock and cryptocurrency markets.
The announcement caused South Korea's stock market to decline, with the Kospi benchmark falling by 2%. Key companies like Samsung and LG Energy Solution saw their shares drop by 1% and 2.8%, respectively. To calm the situation, the government announced plans to inject nearly $7 billion into the market to prevent further chaos.
Meanwhile, South Korea’s cryptocurrency market experienced a significant surge in trading volume, reaching $34.2 billion, a record for the year. This was almost double the previous high of $18 billion set earlier in December. Upbit, the nation’s leading crypto exchange, processed $27.25 billion of these transactions, underscoring its dominant role in the market.
Bitcoin’s price dipped sharply during the 6-hour martial law period, falling to 88 million won ($62,182) on major exchanges as panicked traders sold their assets. The sudden spike in activity led to outages on some platforms. However, once the martial law was rescinded, markets began to stabilize, and Bitcoin’s price recovered.
The president's sudden reversal of martial law has drawn criticism, with opposition parties filing charges of treason and discussing impeachment. These events highlighted the fragility of South Korea’s financial markets, particularly the vulnerability of the crypto sector to liquidity shocks during periods of political instability.
While the situation calmed by Wednesday, the drama captured the attention of crypto analysts and betting markets. On Polymarket, a prediction platform, bets on President Yoon’s early resignation surged, with odds reaching 78% before settling at 47%.
South Korea’s political turbulence underscores how fragile markets, particularly cryptocurrencies, can be during times of uncertainty. The episode serves as a reminder that political events can quickly disrupt financial systems, even in highly developed economies.
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