XRP, the South Korean won, and global cryptocurrency markets faced a sharp downturn after a South Korean court issued an arrest warrant for former President Yoon Suk Yeol.
The political crisis has amplified fears across financial markets, with XRP dropping 2% in the past 24 hours and the won trading at a 16-year low of 1,470 per dollar. The turmoil has further intensified concerns over South Korea’s economic and political stability.
On Tuesday, the Seoul Western District Court issued the warrant for Yoon’s alleged attempts to impose martial law during a live address on December 3. The charges, which include treason and abuse of power, mark an unprecedented move in South Korean history. Yoon’s actions, labeled as addressing “anti-state elements” and “North Korean threats,” were overturned by parliament the next day but have left a lasting impact on the nation’s economy.
South Korea issues arrest warrant for impeached President Yoon https://t.co/yYqMG3U8qs
— Financial Times (@FT) December 31, 2024
Cryptocurrency markets impacted by South Korea’s political crisis
South Korea’s political instability has sent shockwaves through cryptocurrency markets. Significant digital assets such as Bitcoin, Ethereum, and XRP experienced brief declines of up to 4% following Yoon’s declaration of martial law earlier this month. XRP, closely linked to South Korean retail trading behavior, saw a 2% drop in the last 24 hours on Upbit, the country’s leading cryptocurrency exchange, and has fallen 12% over the past week.
XRP/KRW Upbit chart. Source: TradingView.
Bitcoin, now trading at $92,500, is down 0.6% in the past day, with its trading volume spiking by 62% to over $55 billion. Ethereum, meanwhile, fell by 2.4%, trading above $3,300 as trading activity increased by 56% to $25.52 billion. The global cryptocurrency market cap dropped by 1.3% to $3.22 trillion, indicating broader uncertainty among investors as trading volumes surged by 40%.
South Korean won hits record low amid economic challenges
The South Korean won has plunged to its lowest level in 16 years, trading below 1,470 per dollar. The currency has weakened by over 12% in 2024, making it the worst-performing currency in emerging Asia. Political instability and concerns over economic mismanagement and external factors such as potential US tariffs have compounded the pressure on the won.
The Bank of Korea’s recent decision to cut its benchmark interest rate to 3%, following a drop in inflation to 1.9%, has provided limited relief. Additional rate cuts are planned for next year, but the strong US dollar and hawkish Federal Reserve policies continue to weigh on South Korea’s monetary stability.
Broader market sentiment remains volatile
Global market sentiment has remained fragile, with the political crisis in South Korea further unsettling investors. Although the cryptocurrency market rebounded slightly after parliament overturned the martial law order, volatility persists. This year, domestic trading in South Korea surged to its second-highest level as retail traders flocked to high-momentum altcoins like XRP and Dogecoin.
As the year draws to a close, the combined effects of political unrest and economic challenges are expected to shape market trends into 2025. Investors closely monitor developments in South Korea’s political landscape and broader global economic policies.
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