With the South Korean won approaching a 15-year high against the U.S. dollar, discussions over South Korea's economic stability have reignited. Some have compared the current situation to South Korea's nationwide fundraising campaign for an International Monetary Fund (IMF) bailout during the 1998 Asian financial crisis. Back then, South Korean people collectively donated gold to support the country’s foreign exchange reserves. Ki Young Ju, founder of CryptoQuant, pointed out that the USDT/KRW exchange rate has seen a 3% premium and that South Korea may need Bitcoin as an asset reserve.
USDT has a premium of 3%, and South Korean whales are accumulating dollars
Ki Young Ju tweeted that the South Korean won was about to hit a 15-year high against the U.S. dollar and revisited the 1998 incident in which South Korean businesses and people joined forces to donate gold as an asset reserve. He also said that South Korea may need a digital gold collection event this time. South Korea is the country that needs Bitcoin strategic reserves most. It also pointed out that South Korea’s giant whales are accumulating USDT. The current USDT/KRW trading price on Upbit is about 3% higher than the bank exchange rate, and the USDT price is 1,559 KRW.
Source: Ki Young Ju Will everyone donate Bitcoin to save the government? New donation campaign
Looking back at the financial crisis in 1997, it all started in Thailand. The Thai government has planned to devalue the baht several times to make exports more competitive. Many Asian countries (such as Thailand) have pegged their legal currency exchange rates to the U.S. dollar, attracting more foreign investment but also making monetary policy less flexible. At the same time, companies and banks borrowed large amounts of foreign debt, forming asset bubbles, especially in the real estate and stock market sectors. The foreign exchange reserves of these countries cannot support excessive foreign currency debt.
At this time, in the financial market, hedge funds began to short the Thai baht on a large scale. Financial giant George Soros’s Quantum Group of Funds is one of the important players involved. In July 1997, the Thai government announced that it would abandon the fixed exchange rate system, and the Thai baht depreciated rapidly. This caused the cost of foreign currency debt to soar, companies and banks were unable to repay their debts, and the financial system collapsed.
In 1997, South Korea's bubble also burst and it declared bankruptcy on December 3. The IMF signed an agreement, and then signed an agreement with the International Monetary Fund (IMF) to lend $55 billion. This is also regarded as South Korea's biggest national humiliation after the cession of the Korean Peninsula to Japan. At that time, the government, Samsung Group, Daewoo Group, KBS, etc. launched a donation drive to encourage people to donate gold jewelry and other items at home to the country, and eventually raised 225 tons of gold. In the Korean drama (Twenty-five, Twenty-one), Luo Xidu's mother participated in the donation operation.
Is it impossible for South Korea to include Bitcoin in its asset reserves?
The depreciation of the Korean won is mainly affected by the following factors:
South Korea's exports are slowing down: As an export-oriented economy, South Korea's export performance directly affects its economic fundamentals.
Geopolitical risks: The geopolitical uncertainty on the Korean Peninsula and the instability of the overall security situation in the Asia-Pacific region have further intensified foreign investors' risk aversion towards South Korean won assets. Including the already tense relations between South and North Korea, as well as the recent incident of South Korean President Yin Xiyue launching martial law. Across the sea in Japan, Prime Minister Shigeru Ishiba is also facing a crisis where his approval rating continues to drop.
The influence of speculative forces: During the Asian financial crisis in 1997, speculator Soros and his Quantum Fund violently attacked Asian currencies, which was one of the important drivers of the crisis. They used financial derivatives to conduct large-scale short-selling operations. The Korean won was not spared at that time and was forced to depreciate significantly and eventually triggered a comprehensive economic crisis. Judging from the current situation, similar speculation may be repeated in the fields of stablecoins and cryptocurrencies, further deepening the challenges faced by South Korea.
While the idea of establishing a strategic reserve of Bitcoin may seem radical, there is actually precedent. For example, El Salvador has incorporated Bitcoin into the national legal tender system and continues to increase its holdings of Bitcoin assets. In addition, many large international institutions have begun to regard Bitcoin as one of the core assets in their investment portfolios. Even under the leadership of Trump and the Republican Party, it does not seem impossible that the U.S. government will include Bitcoin reserves and even use them to repay U.S. debt.
(The topic of Bitcoin reserves continues! U.S. Federal Reserve Chairman Powell: The FED is not allowed to hold Bitcoin and other crypto assets)
This article South Korean won continues to depreciate, CryptoQuant: South Korea needs new donation actions, BTC joins reserves first appeared on Chain News ABMedia.
