Cryptocurrencies made few gains on Tuesday (3), while volatility increased on Asian exchanges after South Korean President Yoon Suk Yeol declared martial law amid a political impasse in parliament. In local markets, however, digital currencies suffered major losses, with Bitcoin falling by more than 20%.
Most of the biggest crypto assets have seen declines in global markets, with Bitcoin oscillating between small gains and losses. Despite posting a record rally since Donald Trump’s victory in the US presidential election, Bitcoin is struggling to reach the widely expected $100,000 milestone. Altcoins like XRP, which had seen big gains in recent weeks, pulled back.
The price drops were even more pronounced on Korean exchanges, where traders exploit the so-called “Kimchi premium” — a cryptocurrency arbitrage strategy based on the price difference between the Korean and global markets. The price of Bitcoin, relative to the stablecoin Tether (cryptocurrency pegged to the US dollar), fell to $71,814.99 at its low, a 23% drop from the $93,600 recorded by the composite index of global BTC prices from Bloomberg.
Yoon revoked the decree this Wednesday (4). Before that, he surprised the nation, parliamentarians and investors by declaring martial law in a high-risk move, claiming it was necessary to prevent the opposition from paralyzing his government amid political conflict.
Shortly after the revocation, South Korean parliamentarians presented a project to impeach the president. The main opposition Democratic Party (PD) has called on Yoon, who has been in office since 2022, to resign or face impeachment proceedings.
Six South Korean opposition parties subsequently introduced a bill in Parliament to remove Yoon, with a vote scheduled for Friday or Saturday.
Amid the chaos, altcoins also recorded huge losses on Korean exchanges. Dogecoin was traded at around US$0.34 on the local exchange Upbit, compared to US$0.40 on the Bloomberg index. XRP, which had risen significantly in recent days, was quoted at US$2.44 on Upbit, while on the Bloomberg index it was at US$2.46.
South Korea has a disproportionate interest in XRP compared to the US, as FRNT Financial highlighted in a report. “For example, the combined trading volume of the XRP/USD pair was around $2.76 billion in the last 24 hours on Kraken and Coinbase,” analysts at the digital platform said. In the same period, Upbit recorded a volume of US$5.5 billion in the XRP/USD pair.
Altcoins like XRP tend to be less liquid and more volatile than Bitcoin, which is widely used as a store of value. While this volatility has led to record gains since the 2021 crypto bubble, it also means these tokens can post steeper losses than Bitcoin in times of uncertainty.
At around 9am (Brasília time) this Wednesday, XRP was down around 6.5%, while Ether and Dogecoin were up 3.5% and 0.05%, respectively. Bitcoin had slight gains of 1.2%, trading at around US$96,124.
