South Korea’s martial law sparks record-breaking crypto trading surge, reaching $34B in volume

(Originally posted on : Invezz )

The implementation of South Korea’s martial law has unexpectedly driven the country’s cryptocurrency market to new heights, with trading volumes reaching a record-breaking $34.2 billion in the last 24-hour period.

This dramatic surge in trading activity underscores how geopolitical events can trigger significant market movements, particularly within the volatile crypto space.

The heightened trading volume was observed across South Korea’s five major crypto exchanges, which included Upbit, Bithumb, Coinone, Korbit, and Gopax.

This development reflects a growing trend where political unrest impacts financial markets, often leading to panic selling and increased trading volume as investors seek to move assets quickly.

The spike in trading volume came on the heels of South Korea’s decision to implement martial law on December 3, 2024.

Following the emergency curfew and restrictions imposed by the government, the crypto markets in the country saw a massive influx of activity.

According to CoinMarketCap, South Korea’s combined crypto spot trading volume surged nearly 50% in just a day, significantly surpassing the previous record of $18 billion set just a day earlier.

This marked an extraordinary contrast to stock market volumes, which were outpaced by 22%.

The surge in trading activity was primarily attributed to the political instability surrounding President Yoon Suk-yeol’s sudden imposition of martial law.

The decree, which lasted only six hours, was enacted under the pretext of protecting South Korea from “North Korea’s communist forces” and eliminating perceived “anti-state elements.”

However, the law’s abrupt implementation triggered widespread protests and unrest.

In response to the political chaos, South Korean citizens rushed to sell their cryptocurrencies, which led to a sharp decline in digital asset prices.

The prices of major cryptocurrencies such as Bitcoin and Ethereum fell to their lowest levels in months, with Bitcoin dropping to around 88 million won and Ethereum to 4.2 million won.

Some exchanges experienced site outages due to the overwhelming trading activity.

The surge in trading was also reflected in the market dominance of Upbit, South Korea’s largest exchange, which accounted for more than $27.25 billion in spot trading volume alone.

The ripple effect of martial law on crypto prices

As the political unrest unfolded, many South Korean traders, fearing further instability, chose to liquidate their crypto holdings.

This panic sell-off was not unlike previous market reactions seen during other major geopolitical events, such as the onset of the COVID-19 pandemic and the outbreak of the war in Ukraine.

The sudden sell-off sent shockwaves through the market, with altcoins like Ripple (XRP), Stellar Lumens (XLM), and Solana experiencing double-digit declines in price.

The political turmoil surrounding the martial law decision also created ripple effects in the broader financial market.

Crypto investors in South Korea, concerned about the potential for more disruptions, reacted by moving quickly to secure their assets.

As the crisis developed, the country saw an increase in trading volume as local exchanges processed a flood of sell orders.

BoK pledges short-term liquidity boost to stabilize FX market

In response to South Korea’s recent political upheaval, the Bank of Korea (BOK) announced on Wednesday its commitment to boost short-term liquidity and stabilize foreign exchange (FX) markets as necessary.

The Bank of Korea convened an emergency board meeting early Wednesday to assess the financial impact of the turmoil. Following the meeting, the central bank released a statement pledging to inject funds into the market through special loans if required.

“As announced together with the government, we will provide sufficient liquidity for a limited time until the financial and foreign exchange markets stabilize,” the BOK stated.

Local reports from Yonhap News revealed that the country’s financial regulator is prepared to deploy 10 trillion won ($7.07 billion) into a stock market stabilization fund if necessary.

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