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Bitcoin (BTC) has seen a violent drop in South Korean exchanges amid the growing political crisis in the country. Following a recent announcement by the country’s President, the flagship crypto and other crypto assets saw a brief sell-off that plunged their prices by over 30%.
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South Korea Declares First Martial Law In 44 Years
On Tuesday night, South Korean President Yoon Suk Yeol declared an “emergency martial law” for the first time in 44 years, causing panic among Koreans and kickstarting a massive sell-off of Bitcoin and other cryptocurrencies.
The Korean JoongAng Daily explains that a declaration of martial law replaces civilian government with military rule and suspends civilian legal processes for military powers.
Additionally, it allows measures like “restricting freedom of speech, publication, assembly and association, special changes to the authority of governments or courts, and a warrant system by the provisions of related laws.”
Nonetheless, if the parliament requests the lifting of martial law, with the consent of a majority of its members, the president must do so.
In a televised briefing, Yoon stated that the measure was taken to “eradicate pro-North Korean forces and protect the constitutional democratic order.” The President accused the country’s opposition of sympathizing with North Korea and anti-state activities.
It’s worth noting that the opposition Democratic Party has a majority in the South Korean parliament, which has seemingly complicated Yoon’s efforts to push his agenda. In his statement, the Korean President didn’t announce specific measures but cited the opposition’s motion to impeach top prosecutors and reject the government’s budget proposal.
Through this martial law, I will rebuild and protect the free Republic of Korea, which is falling into the depths of national ruin. I will eliminate anti-state forces as quickly as possible and normalize the country.
Democratic Party leader Lee Jae-Myung announced they would attempt to nullify Yoon’s order but expressed concern that the military forces would act against the parliament members.
Bitcoin And XRP See Negative Kimchi Premium
Following the news, the price of Bitcoin saw a sharp correction against its South Korean Won (KRW) pair in local exchanges, dropping 27% on Upbit, Korea’s largest crypto platform.
The flagship cryptocurrency fell from the 132 million KRW mark, worth around $92,000, to as low as 88.26 million KRW, around $62,000. However, it has since recovered from the nosedive, trading again above the pre-crash levels.
At the same time, Bitcoin recorded a price drop on global exchanges, falling momentarily below the $94,000 support before jumping back to the $95,000-$96,000 range on platforms like Binance, ByBit, and OKX.
Similarly, XRP saw its price retrace 60% from the 4,000 KRW mark to as low as 1,623 KRW, worth around $1.23. The cryptocurrency has recovered from the fall in the last hour, trading at 3,600 KRW, valued at $2.52.
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According to Wu Blockchain, the reason behind the negative “Kimchi Premium” is that Korean exchanges do not allow institutional market makers. This, alongside the excessive traffic, “caused prices to be unable to synchronize in a short period of time.”
Ultimately, the latest reports revealed that the Parliament passed the vote to nullify the martial law, ending it after three hours. As of this writing, Bitcoin is trading at 133.2 million KWR in Upbit.
Featured Image from Unsplash.com, Chart from TradingView.com
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