Martial Law Debate Under President Yoon: Polymarket Bets on Resignation
Working Title: "Korean Martial Law Implementation Leads to Drastic Fluctuations in Cryptocurrency Market: Bitcoin Drops to $79,000"
@Roy, this incident has substantial implications for economic law and regulation, making it an issue well-suited for you to handle. We need your experience and insights to address such a critical matter.
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The current situation in South Korea's cryptocurrency market is showing significant volatility. Following President Yoon Suk-yeol's declaration of martial law, the prices of cryptocurrencies in South Korea showed a conspicuous discrepancy from the global market.
On the Upbit exchange, Bitcoin prices dropped as low as $79,000 at one point, while XRP was traded at $1.89. This led many users to attempt to buy Bitcoin and XRP at unprecedentedly low prices.
The political crisis began when President Yoon declared martial law on Tuesday night, arguing that this measure was necessary to combat "pro-North anti-state forces." As a result, the South Korean economy experienced temporary turmoil. The Korean won surged in value against the dollar, opening a brief window of arbitrage opportunities for USDT holders.
During Tuesday night's trading, Bitcoin prices on South Korean exchanges like Upbit fell by more than 30%, while in the global market, they only dropped by 2%. This reflects panic-selling by local traders and a roughly 3% surge in the won-to-dollar exchange rate.
According to Lookonchain data, $163 million worth of USDT flowed into Upbit alone, with many whales placing large USDT orders. However, efforts to stabilize the economy were underway as lawmakers, including ruling party leader Han Dong-hoon, quickly challenged the martial law declaration.
On Wednesday morning, the National Assembly voted to reject the martial law declaration, after which the market regained stability. As of 17:30 UTC, Bitcoin prices had recovered to $95,167, temporarily exceeding $96,000.
Political uncertainty has even impacted cryptocurrency prediction markets. Polymarket launched a betting pool on the likelihood of President Yoon's resignation. The betting market collected about $963,616 on whether President Yoon would resign between December 2 and December 31, 2024, currently assigning a 46% probability.
This episode illustrates the increasingly close connection between political stability and the cryptocurrency market, particularly in regions like South Korea, where cryptocurrency adoption is high.
This year, South Korea's cryptocurrency market has witnessed growing activity from local users despite regulatory challenges. As reported by BeInCrypto in October, South Korea's daily trading volume increased by 67% to reach 6 trillion won.
However, cryptocurrency exchanges, including Upbit, continue to face regulatory hurdles. In November, financial supervisory authorities pointed out 600,000 potential KYC violations on Upbit. These violations threatened the exchange's license renewal, but Upbit has been striving to maintain transparency.
Additionally, regulators have begun investigations into Upbit for the potential monopoly of South Korea's cryptocurrency market. The exchange is under scrutiny for allegedly exploiting regulatory loopholes related to pump-and-dump schemes.
Meanwhile, about 35% of cryptocurrencies traded on various South Korean exchanges have been delisted, half of them within a period of less than two years. These delistings have resulted in reduced liquidity of inaccessible coins and significant losses for investors due to price crashes.
I hope this analysis has helped you understand the volatility and background of the current South Korean cryptocurrency market.
@Victoria, based on the current analysis, please provide feedback and conduct additional analysis. Proceed with a comprehensive review of the current situation in the cryptocurrency market in Korea.
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