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In summary
- The price of Bitcoin on Upbit fell 33% after the declaration of martial law in South Korea.
- XRP lost up to 52% on Upbit before partially recovering.
- Upbit’s trading volume rose 32%, reaching $23 billion in 24 hours.
The price of Bitcoin plummeted on Tuesday on Upbit, South Korea’s largest Cryptocurrency exchange, falling to $61,600 as the country’s president, Yoon Suk Yeol, declared martial law.
The move, announced by Yoon in a late-night televised speech, came alongside accusations that South Korea’s main opposition party was sympathetic to North Korea, according to CNN. Yoon reportedly accused the party of “clear anti-state behavior aimed at inciting rebellion.”
Valued in South Korean won, Bitcoin’s value fell to ₩88,266,000 on Upbit, down 33% from ₩132,429,000 in less than 30 minutes. Since then, the price of Bitcoin has recovered slightly on Upbit, valued at around ₩127,000,000, approximately $88,600 at the time of writing.
Meanwhile, the price of Bitcoin stood at $95,900, falling 1% in the last day, according to CoinGecko. At the time of writing, that meant Bitcoin was trading at an 8% discount on the South Korean exchange, shortly after the country’s president declared martial law.
The discounted price of Bitcoin on the South Korean exchange reflects liquidity trapped within a centralized place, Juan León, senior investment strategist at Bitwise, told Decrypt in a statement. Even though Bitcoin is a decentralized asset that trades 24 hours a day, he noted that imbalances can still arise when “idiosyncratic situations in a locality” create sudden limits.
Citing a “temporary increase in traffic,” Upbit warned users on Tuesday that its services had been delayed, according to a blog post translated by Decrypt. However, in an update, the exchange said the issue had been resolved, while apologizing for any inconvenience caused to its customers.
The price of Ripple-pegged XRP also saw a sharp drop on Upbit when the South Korean president made the allegations. While the price of
According to CoinGecko, XRP was trading at $2.52 on Tuesday. On Upbit, the discrepancy represented a 6.3% discount for the token, which has been one of the market’s best performers in recent weeks.
The exchange rate of the South Korean won to the US dollar also fell almost 3% following the announcement, according to Google Finance.
With the announcement of martial law by the president of South Korea, Upbit’s trading volume skyrocketed, increasing 32% in the past day to $23 billion, according to CoinGecko. Accounting for almost a third of its trading volumes, around $6.5 billion worth of XRP had been traded on the exchange.
A flurry of trading activity among South Korean traders was also reflected on Bithumb, an exchange registered in South Korea. The exchange saw trading volumes increase 20% on Tuesday to $4.6 billion, as $1.4 billion worth of XRP was exchanged, according to CoinGecko.
As digital assets like Bitcoin traded at a discount on South Korean cryptocurrency exchanges on Tuesday, the declaration of martial law effectively created a reverse “Premium Kimchi.” Named after the popular South Korean dish, the phenomenon has a history of several years and resurfaced this year.
Tied to South Korea’s strict capital controls, Kimchi Premium is largely based on how difficult it is to move money in and out of the country. As analysts pointed to a resurgence of South Korean retail traders this year, the premium reached as much as 10% for Bitcoin in March.
In 2018, the Kimchi Premium for Bitcoin reached as much as 54%, but it has historically been difficult for traders to capitalize. While this dynamic once created a lucrative arbitrage opportunity for Bitcoin sellers in South Korea, on Tuesday it worked in the opposite direction.
Edited by Andrew Hayward
Editor’s note: This story was updated after publication with additional details.
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