Market Disruptions in South Korea: Bitcoin Price Drops $30,000 Amid Martial Law Declaration
Update Dec. 8, 1:30 pm UTC: This article has been updated with comments from TradeStation vice president Anthony Rousseau.
The sudden declaration of martial law by President Yoon Suk Yeol on December 3 triggered a massive market disruption in South Korea, resulting in a staggering $30,000 drop in Bitcoin prices. The liquidity crisis that ensued highlighted the vulnerability of South Korean cryptocurrency markets to shocks, particularly during times of political instability.
Martial Law Declaration and Market Disruptions
President Yoon’s declaration of martial law was made during a live television address, citing the need to "eliminate anti-state elements" and address "threats posed by North Korea’s communist forces." The move immediately triggered market disruptions, with Bitcoin (BTC) prices on South Korean exchange Upbit plummeting to as low as 92 million won (approximately $65,000).
Lack of Liquidity Contributes to Sharp Decline
According to trader Ltrd, the sudden disappearance of key market players contributed significantly to the sharp decline in BTC prices. In an X thread, Ltrd explained that the lack of active participants caused an imbalance between bids and asks, resulting in a 10% spread during the crisis.
The Reason for Limited Market Participation
Ltrd attributed the limited market participation to the difficulties encountered by traders in entering the Korean market and trading there. The trader noted that only a few players can provide liquidity and arbitrage those discrepancies, making it "shockingly hard" for others to enter the market.
Impact of Sell Pressure on Price Volatility
The massive sell pressure on all instruments behind the sudden drop further exacerbated the price volatility. However, Ltrd pointed out that the market overreacted, and the extreme price drop would not have happened if more liquidity providers had been participating in the market.
Regional Events and Market Reactions
In a statement sent to Cointelegraph, Anthony Rousseau, vice president and head of brokerage solutions product management at trading platform TradeStation, explained that price fluctuations in regions like South Korea demonstrate how regional events can affect an asset’s price:
"During periods of local crisis or uncertainty, liquidity in active markets — such as South Korean exchanges — may experience sharper reactions due to factors like regulatory changes, market sentiment or exchange-specific dynamics."
Global Bitcoin Market Resilience
Despite the sharp decline in BTC prices on South Korean exchanges, Rousseau emphasized that the global Bitcoin market is robust and resilient:
"This global structure allows Bitcoin to absorb localized shocks without significant spillovers into broader markets, underscoring its resilience and maturing market infrastructure."
South Korean Markets Recover after Martial Law Reversal
Hours after the martial law declaration, 190 lawmakers in South Korea’s parliament voted to nullify the martial law declaration. President Yoon accepted the decision and lifted the order, easing tensions.
Following the reversal, Bitcoin prices rebounded, trading at around 135 million won (approximately $95,000) at the time of publication.
Market Observations and Implications
The temporary crisis highlighted the vulnerability of South Korea’s cryptocurrency markets to liquidity shocks, particularly during times of political instability. Market observers noted that the event underscores the importance of maintaining a stable and resilient market infrastructure in regions with high volatility.
Conclusion
The $30,000 drop in Bitcoin prices on South Korean platforms following President Yoon’s declaration of martial law serves as a reminder of the potential risks associated with regional events and their impact on cryptocurrency markets. The resilience of the global Bitcoin market, however, remains unchanged, and investors can take comfort in knowing that localized shocks are unlikely to have significant spillovers into broader markets.
Related Stories
- South Korea’s Democratic Party agrees to delay crypto tax by 2 years
- Magazine: South Korea’s unique and amazing crypto universe
Subscribe to the Markets Outlook Newsletter
Stay ahead of market trends and gain critical insights to spot investment opportunities, mitigate risks, and refine your trading strategies. Delivered every Monday.
