Crypto market sees slight losses as South Korean market plunges following emergency martial law declaration

Bitcoin (BTC) and the cryptocurrency market experienced minor declines on Tuesday, primarily due to political issues in South Korea, which introduced fear, uncertainty and doubt (FUD) among investors. This contributed to a brief 30% price drop across several crypto assets in Korean exchanges.

South Korean FUD weighs on crypto market

South Korea's President Yoon Suk-yeol declared emergency martial law, citing threats from North Korea and alleging that the opposition party was undermining the government. 

Martial law entails military oversight of civilian governance, typically enacted during significant national threats, and could impact democracy and public safety in a country.

The announcement stirred negative sentiment in the crypto market, causing a dip in prices on major Korean exchanges like Upbit and Bithumb. Bitcoin dipped briefly by 30% on the exchange from $95K to around $61K, with altcoins like Ethereum and Solana dropping to $2K and $146, respectively.

The massive FUD led to temporary delays and restrictions on certain actions in the exchanges.

For instance, Bithumb users began experiencing delays in accessing the site and mobile app, while Upbit users were notified of a service delay on the mobile app.

The Korean Premium Index — a tool used to indicate the price differences between crypto on Korean exchanges and those on global markets — also dropped to a low of -14.67, according to CryptoQuant data. This premium decline meant that crypto prices on Korean exchanges traded 14% lower than the global market.

However, on-chain data suggests investors may have capitalized on the dip following huge USDT inflows into Korean exchanges. Data from Lookonchain indicates that whales deposited $163 million in USDT to Upbit a few hours after the price dipped.