After 44 years, South Korea suddenly experienced a martial law farce lasting only 6 hours. This sudden move shocked both South Korea and the world, triggering severe market fluctuations and exposing newly entering elderly South Koreans to significant volatility in the crypto market.
Although the martial law in South Korea has been lifted, the intertwining of political turmoil and market fluctuations has created huge arbitrage opportunities, and the influx of capital highlights the crypto market's resilience to regional risks.
The sudden martial law in South Korea triggered market turmoil, with funds pouring in for bottom-fishing.
Late at night on December 3, South Korean President Yoon Suk-yeol suddenly announced an emergency martial law, accusing the largest opposition party in South Korea of manipulating the National Assembly and disrupting the country, causing the entire administrative system to paralyze, and stated that he would eliminate 'anti-state forces.' Subsequently, the South Korean National Assembly building was sealed off, and a large number of armored vehicles entered the city center, rapidly plunging market sentiment into panic. It is worth noting that the last time South Korea declared martial law was in 1980, raising concerns among many about whether a real-life 'Seoul Spring' would repeat.
However, just a few hours later, the South Korean National Assembly approved the request to lift martial law after an emergency meeting. The opposition Democratic Party stated that it would charge President Yoon Suk-yeol, the Minister of National Defense, and the Minister of Public Administration and Security with insurrection and push for impeachment. The Democratic Party claimed that it is working on the impeachment case against President Yoon, expecting to complete the drafting of documents for impeachment today; the ruling party in South Korea also reached a 'certain consensus' on issues such as demanding Yoon Suk-yeol to resign from the party, the entire cabinet to resign, and the dismissal of the Minister of National Defense.
With the lifting of martial law and the South Korean government stating that it will provide unlimited liquidity to the market when necessary, market sentiment is gradually stabilizing. Although the future direction of South Korea's political situation remains uncertain, political turmoil has brought significant profit opportunities to the market.
During the period when martial law was in effect, South Korea's financial market experienced significant fluctuations. Due to South Korea's strict KYC and foreign exchange control systems, the liquidity of South Korean crypto exchanges was relatively isolated, and the political upheaval caused a sharp drop in the South Korean crypto market, including a temporary plunge of 30% for Bitcoin and a staggering 60% drop for XRP. This wave of flash crashes led to serious negative premiums in the South Korean market, with large amounts of arbitrage and bottom-fishing funds flooding into South Korean exchanges, even causing trading on platforms like Upbit and Bithumb to be temporarily interrupted or delayed.
According to data from CoinMarketCap, within 24 hours, the total trading volume of several South Korean cryptocurrency exchanges reached 34.2 billion USD, setting a new annual high, with Upbit's trading volume reaching 27.25 billion USD. Meanwhile, according to Lookonchain monitoring, after South Korea announced 'martial law,' many whales transferred large amounts of USDT to Upbit, possibly for bottom-fishing. Within one hour of the announcement of 'martial law,' over 163 million USDT flowed into Upbit. With the influx of bottom-fishing and arbitrage capital, the negative premium of cryptocurrencies on Upbit soon narrowed.
It is worth mentioning that the turmoil surrounding the martial law in South Korea has also led to speculation around some stocks related to the reconstruction of South Korea and MEME tokens. For example, the stock price of 'Korean Construction' in the A-shares market hit the daily limit, and the MEME token 'KoreaCTO' skyrocketed dozens of times last night.
Old altcoins have become a new favorite for South Korean investors, with those born in the 1960s entering the market with their retirement funds.
The South Korean crypto market has been known for its retail herd behavior and kimchi premium. Recently, under warming market conditions, trading volume has at times exceeded that of the South Korean stock market. From the explosion in market trading volume, gradual improvements in regulatory policies, and changes in investor structure, South Korea has become one of the important players in the global crypto market.
According to South Korean media Pulse, citing CryptoQuant data, the monthly total trading volume of stablecoins from the five largest CEXs in South Korea—Upbit, Bithumb, Coinone, Korbit, and GOPAX—was about 16.17 trillion won (11.5 billion USD), an increase of seven times from about 2 trillion won recorded at the beginning of the year, marking the first time that South Korea's monthly stablecoin trading volume exceeded 10 trillion won.
In fact, as South Korea's economy changes and domestic monetary policies evolve, more and more South Korean investors are beginning to invest their funds in the crypto market, displaying extremely high enthusiasm. According to a report released by 10x Research on December 3, retail trading volume in South Korea's crypto market surged to 18 billion USD in the past 24 hours, marking the second highest level this year, surpassing the local stock market's 14 billion USD trading volume.
Behind this growth, the elderly population in South Korea has also become an important participant in the local crypto market. According to reports from the Pioneer Economy, the number of user accounts aged 60 and above on major South Korean cryptocurrency exchanges Upbit and Bithumb reached 775,700 (as of the end of September), an increase of 30.4% compared to the end of 2021. This age group holds 6.7609 trillion won in cryptocurrency assets, with an average investment of about 8.72 million won (approximately 6,173 USD), the highest among all age groups. Meanwhile, the balance of demand deposits in South Korea's five major banks was 592.67 trillion won, a decrease of 26.95 trillion won (about 19.1 billion USD) since the end of June, marking a new low since January this year.
In terms of investment choices, volatile altcoins have become a popular choice for South Korean investors. For example, in the past 24 hours, among the top ten assets by trading volume on Upbit, besides Bitcoin, Ethereum, and stablecoins, altcoins such as XRP, DOGE, IOTA, and HBAR also ranked prominently.
In addition, the South Korean government is also actively promoting the development of its crypto market on a policy level. For instance, the South Korean National Assembly has recently reached an agreement to postpone the implementation of the crypto tax until 2027, marking the third postponement since the tax was first proposed in 2020. The South Korean government has formulated a plan to gradually allow companies to open fiat accounts for virtual assets, initially permitting real-name accounts for non-profit entities such as central government departments, local governments, public institutions, and universities (Phase One). Simon Kim, CEO of South Korea's largest cryptocurrency venture capital firm Hashed, disclosed that the South Korean government may soon allow domestic token issuance and open up institutional investment in cryptocurrencies. However, at the same time, South Korea is tightening its regulatory scrutiny of the crypto market, including expanding the scope of investigations into cryptocurrency price manipulation to individual investors and announcing that the chair of the South Korean FSC will take strong measures to prevent virtual assets from becoming 'loopholes' in anti-money laundering systems.