As the KRW/USD exchange rate approaches a 15-year high, the market is once again stirring discussions about the stability of the South Korean economy. Some people compare the current situation to the nationwide fundraising movement during the 1998 Asian financial crisis when South Korea launched a campaign to support the national foreign exchange reserves due to the International Monetary Fund (IMF) bailout. At that time, the South Korean public collectively donated gold to support the country's foreign exchange reserves. Ki Young Ju, the founder of CryptoQuant, pointed out that a 3% premium has appeared in the USDT/KRW exchange rate, and South Korea may need Bitcoin as an asset reserve.
USDT has a 3% premium, and South Korean whales are accumulating USD.
Ki Young Ju stated on Twitter that the KRW/USD exchange rate is about to reach a 15-year high and recalled the event in 1998 when South Korean companies and citizens united to donate gold as asset reserves. He mentioned that South Korea may need a digital gold collection campaign this time, as it is the country that needs Bitcoin strategic reserves the most. He also pointed out that South Korean whales are accumulating USDT, with the USDT/KRW trading price on Upbit currently about 3% higher than the bank's exchange rate, and the USDT price is 1,559 KRW.
Source: Ki Young Ju, will the public donate Bitcoin to save the government? A new fundraising campaign.
Looking back at the financial storm of 1997, it all started in Thailand. The Thai government had planned several times to devalue the baht to make exports more competitive. Many Asian countries (such as Thailand) fixed their local currency exchange rates to the dollar, attracting more foreign investment, but also causing monetary policy to lose flexibility. At the same time, enterprises and banks borrowed heavily in foreign debt, creating asset bubbles, particularly in the real estate and stock market sectors. The foreign exchange reserves of these countries could not support excessive foreign currency debts.
At that time in the financial market, hedge funds began to short the baht on a large scale. Financial giant George Soros's Quantum Fund was one of the key players involved. In July 1997, the Thai government announced the abandonment of the fixed exchange rate system, leading to a rapid depreciation of the baht, which caused foreign debt costs to soar, making it impossible for enterprises and banks to repay debts, resulting in a collapse of the financial system.
In 1997, South Korea's bubble also burst, declaring bankruptcy on December 3. The IMF signed an agreement and subsequently borrowed $55 billion, which is regarded as South Korea's greatest national humiliation since ceding the Korean Peninsula to Japan. At that time, the government, Samsung Group, Daewoo Group, KBS, and others launched fundraising campaigns, encouraging the public to donate gold jewelry and other valuables to the state, ultimately raising 225 tons of gold. The mother of Ra Hee Do in the drama (Twenty Five, Twenty One) participated in the fundraising campaign.
Is it impossible for South Korea to include Bitcoin in its asset reserves?
The depreciation of the KRW is mainly influenced by the following factors:
South Korea's exports are slowing: As an export-oriented economy, South Korea's export performance directly affects its economic fundamentals.
Geopolitical risks: The geopolitical uncertainty of the Korean Peninsula and the overall insecurity in the Asia-Pacific region have further intensified foreign capital's risk aversion towards KRW assets. This includes the already tense North-South Korea relations, as well as the recent imposition of martial law by South Korean President Yoon Suk-yeol. Meanwhile, Japan, separated by a sea, also faces a crisis with Prime Minister Kishida facing declining approval ratings.
The influence of speculative forces: During the 1997 Asian financial crisis, speculator George Soros and his Quantum Fund's fierce attacks on Asian currencies were one of the major driving forces of the crisis. They utilized financial derivatives for large-scale short-selling operations, and the KRW was no exception, forced to devalue significantly, ultimately triggering a comprehensive economic crisis. Looking at the current situation, similar speculative behavior may occur again in the stablecoin and cryptocurrency sectors, further deepening the challenges faced by South Korea.
Although the idea of establishing a Bitcoin strategic reserve may seem radical, there are precedents. For example, El Salvador has incorporated Bitcoin into its national legal currency system and continues to increase its Bitcoin assets. Additionally, many large international institutions have begun to view 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 for the U.S. government to include Bitcoin reserves, even using it to repay national debt.
(Bitcoin reserve discussions continue! Federal Reserve Chairman Powell: The FED is not allowed to hold Bitcoin and other crypto assets)
This article about the continuous depreciation of the KRW, CryptoQuant: South Korea needs a new fundraising campaign, BTC to be included in reserves first appeared on Chain News ABMedia.
