This winter in Seoul seems to show signs of repeating the 'Seoul Spring'.
Written by: Pzai, Foresight News
On the evening of December 3, South Korean President Yoon Suk-yeol unexpectedly held a live television broadcast at the presidential office, announcing the implementation of 'emergency martial law'. That night, there was a confrontation by opposition party members in front of the South Korean National Assembly, but at 4 AM, after the martial law was declared invalid by a parliamentary vote, it was announced to be lifted by Yoon Suk-yeol. This martial law was issued for the first time since 1980 but lasted only 6 hours. The impact of this martial law on the financial market, especially the volatility in the cryptocurrency market, was quite severe.
As of the time of writing, various trading pairs on the Upbit platform have basically returned to normal. The price of Bitcoin is reported at 134,640,000 KRW (approximately $95,000).
Market Reaction
After the declaration of martial law, South Korean cryptocurrency exchange Upbit experienced trading interruptions due to excessive traffic, causing the Bitcoin/KRW trading pair to briefly spike below 90 million KRW (approximately $63,300), and the USDC/USDT exchange rate briefly rose to 1.2.
It is also worth noting that the XRP token, favored by South Koreans, fell from $2.9 to $1.16 briefly. As a relatively mature country in the cryptocurrency market, South Korea's retail trading volume on December 2 had already reached $18 billion, mostly led by altcoins (such as DOGE and XRP), with XRP alone accounting for $6.3 billion. DOGE also briefly dipped below $0.23 during this incident.
In terms of related token performance, the South Korean public chain KAIA token briefly dropped below $0.25 during last night's events but recovered to $0.338.
In terms of exchange inflow, within one hour after the declaration of 'martial law', over 163 million USDT flowed into Upbit, hoping to seize the opportunity to buy the dip during the volatility. Last night, after South Korean authorities announced they would provide 'unlimited liquidity' to the market and after a parliamentary vote, market fluctuations were quickly smoothed out by the inflow of funds.
On Polymarket, the probability of the South Korean president being impeached has begun to attract the attention and purchases of traders, with the probability of Yoon Suk-yeol stepping down this year predicted to be 61%. This Friday, the probability of his impeachment also rapidly soared to 45%, before dropping to 33%.
Market Opinion
After the incident occurred, South Korean regulatory agencies stated they were ready to deploy 10 trillion KRW for a stock market stabilization fund and would take measures to normalize the financial market. The market responded accordingly to South Korea's bailout measures, and today the South Korean stock market opened as usual, with related tokens subsequently recovering to normal levels.
The strategic consulting firm The Geopolitical Business stated that if the political crisis continues, domestic and international measures in South Korea may face various obstacles and paralysis, while the withdrawal of the martial law and the announcement by the South Korean Joint Chiefs of Staff to temporarily control troop movements except for surveillance and warning operations have also temporarily eased market sentiment.
Before this martial law incident, South Korea's cryptocurrency market was attracting an increasing number of middle-aged and elderly individuals. Recently, the number of accounts held by users over the age of 60 on South Korean exchanges Upbit and Bithumb increased by 30.4% compared to the end of 2021, while the aftermath of the political turmoil will become the primary factor users consider for asset storage, including the increased distrust in the South Korean local stock and foreign exchange markets, leading to higher demand for cryptocurrencies. Additionally, Upbit's XRP trading volume exceeded that of the South Korean KOSPI stock index.
Additionally, this fluctuation reflects that relatively isolated fiat exchanges are significantly affected by geopolitical factors as the main trading venues for South Koreans, and it is expected that some South Korean users will shift towards on-chain liquidity trading and asset storage in the near future.
