The cryptocurrency market experienced a roller coaster-like fluctuation before and after the Korean martial law crisis

Author: Climber, Golden Finance

On the evening of December 3, South Korean President Yoon Seok-yeol announced the implementation of "emergency martial law" across the country. This decree caused panic selling in the Korean crypto market. For a time, Bitcoin fell below $70,000, and many blue-chip altcoins fell by more than 30%. FUD sentiment spread to the global crypto market.

However, fortunately, the martial law storm was a false alarm. With the revocation of the decree, the crypto market returned to stability, and Bitcoin returned to above $66,500. In this storm, judging from the speed of Bitcoin's recovery and the subsequent rise of various altcoins, the crypto market is still favored by capital.

1.The whole story of the martial law storm

On the evening of December 3, South Korean President Yoon Seok-yeol suddenly made a live TV speech and announced the implementation of "emergency martial law". He claimed that the opposition party was coercing the parliament and disrupting the country, and said that he would eliminate "anti-state forces" in South Korea. According to outside analysis, the recent series of legislation promoted by the South Korean opposition party against the first lady and the impeachment of public officials such as prosecutors may be the fuse for Yoon Seok-yeol's announcement of "emergency martial law".

This time, South Korean President Yoon Seok-yeol announced martial law, which is the first time since 1980.

The South Korean Martial Law Command then issued the No. 1 Martial Law Order. The South Korean National Assembly was urgently closed, and South Korean opposition party members clashed with the police in front of the National Assembly.

Former South Korean President Moon Jae-in said about President Yoon Seok-yeol's announcement of emergency martial law: "I hope the National Assembly will quickly stand up to protect the collapsed democracy." Moon Jae-in wrote on social media: "South Korea's democracy is facing a crisis of going from top to bottom." He said: "I hope the people will work together to protect and save democracy and provide strength for the normal functioning of the National Assembly."

Some analysts pointed out that if the opposition-controlled National Assembly voted to abolish the agreement, the agreement would be short-lived, and it was later proved to be true.

South Korean National Assembly Speaker Woo Won-sik said that the South Korean National Assembly will respond to the emergency martial law in accordance with constitutional procedures. After that, the South Korean National Assembly began a plenary session and voted on "demanding the lifting of the emergency martial law order." 190 members attended the meeting, 170 members voted in favor, and Woo Won-sik then declared the emergency martial law order invalid.

Yun Seok-yeol also announced in the Presidential Office that he had decided to accept the request of the National Assembly and lift the martial law order. This was just over 6 hours after he implemented the martial law order. In addition, the South Korean cabinet also agreed to lift the martial law order.

However, the storm is far from over for Yoon Seok-yeol.

On December 4, South Korea's largest opposition party, the Democratic Party of Korea, said it would accuse President Yoon Seok-yeol, the Minister of Defense, and the Minister of Public Administration and Security of the crime of civil strife and promote impeachment. The Democratic Party of Korea said that it is promoting the impeachment of President Yoon Seok-yeol and is expected to complete the drafting of documents to initiate impeachment today.

Then the Democratic Party urged Yoon Seok-yeol to step down immediately and proposed that the entire cabinet resign and the defense minister be removed. In addition, it was stated that if he did not resign immediately, the impeachment procedure would be promoted.

The Democratic Party issued a resolution containing the above content after convening an emergency meeting of members of the National Assembly that day. The resolution reads: "Yoon Seok-yeol's announcement of the implementation of an emergency martial law order is clearly in violation of the constitution and did not comply with any conditions required for the declaration (martial law)", "The declaration of an emergency martial law itself is invalid and a serious violation of the constitution", "This is a serious act of civil unrest and a perfect reason for impeachment."

In addition, the leadership of the ruling party of South Korea, the National Power Party, also held a non-public Supreme Committee meeting in the National Assembly. The meeting discussed plans such as President Yoon Seok-yeol's withdrawal from the party and the resignation of the entire cabinet to hold Yoon Seok-yeol accountable for issuing an emergency martial law order.

As of the time of writing, the director and chief secretary of the South Korean presidential office have collectively resigned, and the South Korean cabinet ministers have collectively resigned.

In addition, Yoon Seok-yeol was originally scheduled to attend a drug control inspection meeting that morning, but due to the martial law storm, this meeting was postponed. Yoon Seok-yeol's other activities will also be affected.

2. A night of terror, but the crypto market is safe

The martial law announced by South Korean President Yoon Seok-yeol caused panic in the Korean crypto market, and even caused a decline in markets outside the local area.

Data shows that the martial law caused the Korean crypto market's trading volume to soar to US$34 billion within 24 hours, setting a new annual high. Among them, Upbit's trading volume reached US$27.25 billion.

The increase in trading volume was mainly due to panic selling in the Korean crypto market, with the price of Bitcoin falling to US$62,182 at one point, and service interruptions at many exchanges.

On the evening of December 3, as the price of Bitcoin on the Upbit platform "plugged in" and fell below $70,000, the prices of various altcoins on the platform once experienced a flash crash. The mainstream altcoin XRP fell to $1.3, ETH fell to $2,712, SOL fell to $134...

According to market news, the UPBIT platform was interrupted due to increased traffic. The USDC/USDT exchange rate on the Upbit platform rose to 1.2.

Affected by the flash crash of the Korean crypto market, the global crypto market also fell overall. Bitcoin also fell to $93,578 on mainstream trading platforms such as Binance. According to Coinglass data, the entire network has been liquidated for $611 million in the past 24 hours, including $384 million in long orders and $227 million in short orders.

However, with the South Korean government's statement that it will take all necessary measures to stabilize the market, provide unlimited liquidity to the market when necessary, and the removal of martial law, the crypto market has gradually returned to stability.

In addition, South Korean regulators said they are ready to deploy a 10 trillion won stock market stabilization fund at any time.

As the incident subsided, Bitcoin also rebounded strongly to break through $96,500, completely wiping out the decline caused by the emergency in South Korea.

However, in this storm, a large amount of bargain-hunting funds poured in.

According to Lookonchain monitoring, the cryptocurrency market plummeted after South Korea announced "martial law". Many whales transferred a large amount of USDT to Upbit, probably to bargain-hunt. Within an hour of the announcement of "martial law", more than 163 million USDT flowed into Upbit.

In addition to the crypto market, South Korean-related assets also plummeted before and after the martial law storm, with the won falling to a two-year low, further triggering investors' concerns about political instability and turmoil.

After the Korean martial law storm, PolyMarket traders currently predict that there is a 72% chance that the government of South Korean President Yoon Seok-yeol will be overthrown by 2025.

Other traders said that they suspected that the South Korean authorities sold US dollars at the opening of the onshore market to limit the decline of the won.

The Korean martial law storm seems to have subsided, but there are still several major crypto-related events in South Korea that are worth paying attention to recently.

On November 28, the Bank of Korea cut interest rates by 25 basis points to 3.00%, and the market expected it to remain unchanged at 3.25%.

On December 1, South Korea postponed the collection of cryptocurrency taxes again until 2027. The proposal to "postpone cryptocurrency profit tax" was put forward by the South Korean government and the ruling People Power Party. The Democratic Party of Korea previously said that postponing taxation was a political trick of the ruling party.

On December 3, South Korea will charge regulatory fees for crypto exchanges such as Upbit, Bithumb and Coinone from next year. The regulatory fees are calculated based on operating income and paid by financial institutions such as banks, investment companies, and insurance companies to cover FSC's inspection and supervision services.

Summary

South Korean President Yoon Seok-yeol's announcement of martial law caused a lot of turmoil in the crypto market, especially the crypto contract market outside South Korea. Fortunately, the turmoil lasted for a short time, and the crypto market quickly recovered. But the follow-up work on the current South Korean president is still continuing, and with the submission of the impeachment bill, South Korea will usher in another wave of turmoil. By then, the local crypto market in South Korea may usher in a new change.