what happen?
On the evening of yesterday (3rd), South Korea’s President Yoon Seok-yue declared a state of emergency martial law, causing cryptocurrency to plummet on Upbit, Bithumb and Coinone, the most popular exchanges in the country.
Martial law caused panic among the public. Bitcoin (BTC) once fell by 12% on the Korean exchange Upbit, and the US dollar stable currency USDT also fell to 84 cents.
South Korean President Yoon Seok-yue lifted martial law less than six hours after announcing it
On December 3, 2024, South Korean President Yoon Suk-yeol suddenly declared a state of martial law across the country and accused the main opposition party of being "pro-North" and engaging in anti-national activities. The decision quickly triggered a nationwide political storm. Martial law, which required the military to be stationed in the Capitol and banned all political and social activities, immediately triggered a strong reaction from the public and parliament, with many viewing the move as a serious threat to democracy.
The last time South Korea declared emergency martial law was in 1980. Yoon Seok-yue emphasized that such a decision would be made to respond to threats from North Korea and maintain national security, and claimed that "to protect a free Korea and eliminate anti-national forces," however, this move It has been criticized as a serious challenge to the constitution and democratic system.
After the promulgation of martial law, it immediately aroused strong reactions at home and abroad, especially the cryptocurrency market, which experienced significant fluctuations. The trading volumes of South Korea's major cryptocurrency exchanges Upbit, Bithumb and Coinone increased sharply, while the prices of Bitcoin, Ethereum (ETH) and Ripple (XRP) fell sharply.
The South Korean Parliament immediately held a vote, and 190 members voted to overturn the martial law and demanded its immediate withdrawal.
Less than 12 hours after the declaration of martial law, Yin Xiyue announced in the early morning of December 4 the withdrawal of the martial law declared late that night and withdrew the deployed troops.
The swift reversal attracted attention at home and abroad. After withdrawing martial law, Yun Xiyue said that the opposition party's multiple impeachment actions and budget proposals hindered the normal operation of the government, forcing him to make such a decision. However, despite withdrawing the order, Yin Xiyue still faced fierce criticism from the opposition parties and some senior officials of the ruling party.
Cryptocurrency markets in turmoil: Bitcoin, Ethereum and XRP recover after short-term plunge
The South Korean cryptocurrency market was hit hard after Yoon Seok-yue declared martial law.
Among them, Bitcoin once fell from US$90,000 to more than US$60,000 on South Korea's Upbit exchange, the US dollar stable currency USDT once fell to US$0.84, and Ripple (XRP) fell from US$2.9 to US$1.3. Other altcoins, such as Shiba Inu Coin (SHIB) and Dogecoin, have also faced double-digit declines.
Martial law caused panic among local people. Many major exchanges in South Korea flooded into a large number of transactions. The explosion in trading volume once caused Upbit and Bithumb to suspend users, reflecting the market's sensitivity to sudden events.
However, market conditions picked up following Yoon Seok-yue's decision to lift martial law and respect the National Assembly's vote. According to data from CoinMarketCap, the price of Bitcoin rebounded by 2.4%, Ethereum rebounded by 3.3%, and XRP rebounded by 9.2%.
Why did cryptocurrency plummet when South Korea declared martial law?
After South Korea declared martial law, the cryptocurrency market immediately fell sharply. The cryptocurrency market reacts quickly to investor sentiment, which may be related to several factors.
Reason 1: Panic market sentiment
Martial law is an extreme political action that usually represents a high degree of instability within a country.
Under such circumstances, market sentiment is usually affected, with investors in particular becoming more cautious and panicked. When a country declares martial law, it may cause investors to worry about the future direction of the country's economy, and may even bring uncertainty to global financial markets.
Since the cryptocurrency market is usually sensitive, when the situation is unclear or full of conflicts, investors will quickly withdraw their funds to reduce risks, directly leading to a decline in cryptocurrency prices.
Panic selling is often the market's reaction when major changes occur in global financial markets and political situations. Especially in a highly volatile market like cryptocurrency, any political crisis or uncertainty can exacerbate panic in the market and cause wild price swings.
Reason 2: The high-risk nature of the cryptocurrency market
Cryptocurrency is a highly speculative and volatile market, and investors prefer to invest in stable safe-haven assets, such as gold or government bonds, when the global economic and political environment is uncertain.
When political turmoil intensifies, especially when extreme orders like martial law occur, many investors are more likely to choose to withdraw funds from the cryptocurrency market, because cryptocurrency still lacks government support, making some users worry that it may not be able to withstand large-scale financial disruptions. storm.
Reason 3: The influence of foreign investment
In addition to domestic investors, martial law in South Korea may also cause concerns among foreign investors.
When investors feel uncertain about the political background behind martial law and the direction of future policies, they often choose to withdraw funds from riskier assets, and cryptocurrency naturally becomes one of the targets for withdrawal.
References: cointelegraph, the block, cnn
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