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A dramatic scene in the South Korean cryptocurrency market: altcoins lead the rise, elderly people rush into the market, and the state of emergency t

A dramatic scene in the South Korean cryptocurrency market: altcoins lead the rise, elderly people rush into the market, and the state of emergency t

ChaincatcherChaincatcher2024/12/05 06:22
By:PANews

The farce of the South Korean martial law has triggered significant market fluctuations, making the recently entered elderly investors in South Korea feel the immense volatility of the crypto market. Although the martial law in South Korea has been lifted, the intertwining of political turmoil and market fluctuations has created substantial arbitrage opportunities, and the influx of large amounts of capital has also highlighted the crypto market's resilience to regional risks.

Author: Nancy, PANews

After 44 years, South Korea suddenly experienced a farcical six-hour martial law, a sudden move that shocked both South Korea and the world, triggering significant market volatility and exposing the immense fluctuations of the crypto market to the elderly investors who recently entered.

Although the martial law in South Korea has been lifted, the intertwining of political turmoil and market fluctuations has created substantial arbitrage opportunities, and the influx of capital has highlighted the crypto market's resilience to regional risks.

Sudden Martial Law in South Korea Triggers Market Turmoil, Massive Inflows for Bargain Hunting

Late on December 3, South Korean President Yoon Suk-yeol suddenly announced an emergency martial law, accusing the largest opposition party of manipulating the National Assembly and disrupting the country, causing the entire administrative system to paralyze, and stating that he would purge "anti-national forces." Subsequently, the South Korean National Assembly building was sealed off, and numerous armored vehicles entered the city center, causing market sentiment in South Korea to plunge into panic. It is worth noting that the last time South Korea declared martial law was in 1980, raising concerns about whether a real-life "Seoul Spring" would reoccur.

However, just a few hours later, the South Korean National Assembly passed a request to lift the martial law after an emergency meeting. The opposition Democratic Party stated that they would charge President Yoon Suk-yeol, the Minister of National Defense, and the Minister of the Interior and Safety with insurrection and push for impeachment. The Democratic Party claimed that they were advancing the impeachment case against President Yoon, expecting to complete the drafting of the documents and initiate impeachment within the day; the ruling party also reached a "certain consensus" on issues such as demanding Yoon Suk-yeol resign from the party, the entire cabinet resign, and the dismissal of the Minister of National Defense.

With the lifting of martial law and the South Korean government's statement that it would provide unlimited liquidity to the market when necessary, market sentiment gradually stabilized. Although the future direction of South Korea's political situation remains uncertain, the political turmoil has created significant profit opportunities for the market.

During the period when martial law was in effect, South Korea's financial market experienced significant volatility. Due to the strict KYC and foreign exchange control systems in the South Korean market, the liquidity of South Korean crypto exchanges was relatively isolated, leading to a sharp drop in the South Korean crypto market triggered by the political upheaval, including Bitcoin briefly plunging 30% and XRP dropping as much as 60%. This wave of flash crashes resulted in severe negative premiums in the South Korean market, with substantial arbitrage and bargain-hunting funds flooding into South Korean exchanges, even causing platforms like Upbit and Bithumb to experience temporary trading interruptions or delays.

According to data from CoinMarketCap, within 24 hours, the total trading volume of several South Korean crypto exchanges reached $34.2 billion, setting a new annual high, with Upbit's trading volume reaching $27.25 billion. Meanwhile, according to Lookonchain monitoring, after South Korea announced "martial law," many whales transferred large amounts of USDT to Upbit, possibly for bargain hunting. Within one hour of the announcement of "martial law," over 163 million USDT flowed into Upbit. With the influx of bargain-hunting and arbitrage funds, the negative premium of cryptocurrencies on Upbit soon narrowed.

It is worth mentioning that the martial law incident in South Korea also spurred speculation in some concept stocks and MEME tokens related to rebuilding South Korea. For example, the stock price of "Korean Construction" in the A-share market hit the daily limit, and the MEME coin "KoreaCTO" surged dozens of times last night.

A dramatic scene in the South Korean cryptocurrency market: altcoins lead the rise, elderly people rush into the market, and the state of emergency t image 0

Old Altcoins Become New Favorites for South Korean Investors, 60s Generation Entering the Market with Retirement Funds

The South Korean crypto market has been known for its retail herd effect and kimchi premium, and recently, as the market warmed up, trading volume briefly surpassed that of the South Korean stock market. From the explosive market trading volume, the gradual improvement of regulatory policies, and the 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 approximately 16.17 trillion won ($11.5 billion), a sevenfold increase from about 2 trillion won recorded at the beginning of the year, marking the first time South Korea's monthly stablecoin trading volume exceeded 10 trillion won.

In fact, with the changes in the South Korean economy and domestic monetary policy, more and more South Korean investors have begun to invest in the crypto market, showing extremely high enthusiasm. According to a report released by 10x Research on December 3, the retail trading volume in the South Korean crypto market surged to $18 billion in the past 24 hours, setting the second-highest level of the year, surpassing the local stock market's trading volume of $14 billion.

Behind this growth, the elderly population in South Korea has also become an important participant in the local crypto market. According to a report by the Pioneer Economy, the number of user accounts aged 60 and above on major South Korean crypto exchanges Upbit and Bithumb reached 775,700 (as of the end of September), a 30.4% increase from the end of 2021. This age group holds a total of 6.7609 trillion won in crypto assets, with an average investment amount of about 8.72 million won (approximately $6,173), 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 (approximately $1.91 billion) from the end of June, marking a new low since January of this year.

In terms of investment choices, highly volatile altcoins have become popular among South Korean investors. For example, according to Upbit data, among the top ten assets by trading volume in the past 24 hours, besides Bitcoin, Ethereum, and stablecoins, altcoins like XRP, DOGE, IOTA, and HBAR also ranked high.

A dramatic scene in the South Korean cryptocurrency market: altcoins lead the rise, elderly people rush into the market, and the state of emergency t image 1

Additionally, the South Korean government is actively promoting the development of its crypto market at the policy level. For instance, the South Korean National Assembly has recently reached a consensus to delay the implementation of the crypto tax until 2027, marking the third delay 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 crypto venture capital firm Hashed, disclosed that the South Korean government may soon allow domestic token issuance and open institutional investment in cryptocurrencies. However, at the same time, South Korea is tightening its regulatory measures on the crypto market, including expanding the scope of investigations into cryptocurrency price manipulation to individual investors and the announcement by the chairman of the South Korean FSC to take strong measures to prevent virtual assets from becoming "loopholes" in the anti-money laundering system.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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