Dramatic scenes in South Korea's crypto market: altcoins lead the rally, seniors rush into investing, while a martial law announcement triggers a flash crash
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Dramatic scenes in South Korea's crypto market: altcoins lead the rally, seniors rush into investing, while a martial law announcement triggers a flash crash
The farce of South Korea's martial law declaration triggered severe market volatility, giving newly entered elderly investors a harsh taste of the crypto market's extreme swings.
Navigating Web3 tides with focused insightsBy Nancy, PANews
After 44 years, South Korea abruptly experienced a short-lived six-hour martial law declaration, a sudden move that shocked both the nation and the world, triggering severe market volatility and giving newly-entered elderly investors in Korea their first real taste of crypto market turbulence.
Although the martial law has since been lifted, the interplay between political unrest and market fluctuations has created substantial arbitrage opportunities, while the influx of capital highlighted the cryptocurrency market’s resilience to regional risks.
Sudden Martial Law in South Korea Triggers Market Turmoil, Prompting Massive Capital Influx for Bottom-Fishing
In the late hours of December 3, South Korean President Yoon Suk-yeol suddenly declared emergency martial law, accusing the country's main opposition party of hijacking the National Assembly and paralyzing the entire administrative system. He claimed it was necessary to purge "anti-state forces." Subsequently, the National Assembly building was sealed off, armored vehicles entered downtown Seoul, and market sentiment rapidly plunged into panic. The last time South Korea imposed martial law was in 1980, prompting widespread fears about a potential repeat of the "Spring of Seoul."
However, just hours later, the National Assembly passed a resolution during an emergency session calling for the lifting of martial law. The opposition Democratic Party announced plans to file charges of insurrection against President Yoon, the Defense Minister, and the Minister of the Ministry of the Interior and Safety, and proceed with impeachment procedures. They stated that drafting work on the presidential impeachment motion would be completed and submitted within the day. Meanwhile, the ruling party reportedly reached a preliminary consensus on demands including Yoon's expulsion from the party, the resignation of the entire cabinet, and the dismissal of the Defense Minister.
With the lifting of martial law and assurances from the government that it would provide unlimited liquidity to markets if needed, market sentiment gradually stabilized. While the future direction of South Korea’s political landscape remains uncertain, the political turmoil has opened up significant profit opportunities in financial markets.
During the period when martial law was in effect, South Korea’s financial markets underwent sharp volatility. Due to strict KYC requirements and foreign exchange controls, South Korean crypto exchanges operate with relatively isolated liquidity. Political upheaval triggered a dramatic selloff in the local crypto market—Bitcoin briefly plunged by 30%, and XRP even dropped as much as 60% at one point. This flash crash led to severe negative premiums in the South Korean market, attracting massive inflows of arbitrage and bottom-fishing capital into Korean exchanges, causing platforms like Upbit and Bithumb to experience temporary trading outages or delays.
According to CoinMarketCap data, within 24 hours, total trading volume across multiple South Korean crypto exchanges reached $34.2 billion, a yearly high, with Upbit alone accounting for $27.25 billion. Additionally, Lookonchain data showed that immediately after the martial law announcement, many whales transferred large amounts of USDT to Upbit, likely positioning themselves for buying opportunities. Within one hour of the announcement, over 163 million USDT flowed into Upbit. As more bottom-fishing and cross-exchange arbitrage capital poured in, the negative premium on cryptocurrencies listed on Upbit quickly narrowed.
Notably, the martial law crisis also fueled speculation around so-called “rebuilding Korea” concept stocks and meme tokens. For example, the Chinese A-share stock “Han Jian Heshan” opened at its daily limit-up price, while the meme coin “KoreaCTO” surged dozens of times in value overnight.
Old Altcoins Become New Favorites Among Korean Investors; Baby Boomers Enter Market with Retirement Funds
The South Korean crypto market has long been known for its pronounced retail investor herd behavior and persistent "Kimchi premium." Amid the recent market rally, trading volumes have at times exceeded those of the country's traditional stock market. With explosive trading activity, evolving regulatory frameworks, and shifts in investor demographics, South Korea has emerged as a key player in the global crypto market.
According to South Korean media Pulse citing CryptoQuant data, the combined monthly stablecoin trading volume on South Korea’s top five centralized exchanges—Upbit, Bithumb, Coinone, Korbit, and GOPAX—reached approximately 16.17 trillion KRW (~$11.5 billion), a sevenfold increase compared to around 2 trillion KRW recorded at the beginning of the year. It marked the first time South Korea’s monthly stablecoin trading volume surpassed 10 trillion KRW.
In fact, amid changes in South Korea’s economic conditions and monetary policy, increasing numbers of Korean investors are channeling funds into the crypto market with growing 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 in the past 24 hours—the second-highest level this year—surpassing the $14 billion turnover in the local stock market.
Behind this surge, older Korean investors have become a significant force in the domestic crypto market. According to Pioneer Economic Daily, the number of users 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 since the end of 2021. This age group collectively holds 6.7609 trillion KRW worth of crypto assets, averaging around 8.72 million KRW (~$6,173) per person—the highest among all age groups. Meanwhile, demand deposit balances at South Korea’s five largest banks stood at 592.67 trillion KRW, down 26.95 trillion KRW (~$19.1 billion) from the end of June, hitting the lowest level since January this year.
When it comes to investment choices, highly volatile altcoins have become popular picks among Korean investors. According to Upbit data, among the top ten most traded assets over the past 24 hours, alongside Bitcoin, Ethereum, and stablecoins, altcoins such as XRP, DOGE, IOTA, and HBAR ranked prominently in trading volume.
Moreover, the South Korean government is actively advancing policies to support the development of its crypto market. For instance, the National Assembly recently agreed to delay the implementation of the crypto taxation policy until 2027—the third postponement since the tax was first proposed in 2020. The government has also laid out a phased plan allowing entities to open fiat accounts for virtual asset transactions, starting with real-name accounts for central government agencies, local governments, public institutions, and universities (Phase One). Simon Kim, CEO of Hashed—the largest crypto venture firm in South Korea—revealed that the government may soon allow domestic token issuance and institutional investments in cryptocurrencies. At the same time, however, South Korea is tightening oversight of the crypto market, including expanding investigations into price manipulation to include individual investors and FSC Chairman announcing stronger measures to prevent virtual assets from becoming loopholes in anti-money laundering systems.
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