In response to the political crisis currently unfolding in South Korea, the government promised to provide “unlimited liquidity” to financial markets to mitigate the effects of instability.
The Ministry of Economy and Finance issued a statement announcing that it plans to “deploy all possible measures to stabilize the market,” which includes ensuring the availability of unlimited liquidity, reported Bloomberg.
When a government guarantees “unlimited liquidity” to financial markets, it agrees to inject as much money as necessary to maintain financial stability. This can be executed through expansionary monetary policies, where the central bank or government acquires financial assets, offers loans at reduced rates, or even print more currency. Such a situation could cause increases in asset prices, including Bitcoin/” target=”_blank” rel=”noreferrer noopener”>bitcoin (BTC), although it all depends on what the government orders about the use of that liquidity.
South Korea’s political situation escalated when President Yoon Suk-yeol declared Martial Law, sending military forces to take control of Parliament with the aim of preventing an emergency session of lawmakers. Despite these efforts, the parliamentarians managed to meet and they voted unanimously to lift Martial Law. As a result, military troops withdrew from the legislative chamber.
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These events have generated a wave of protests in several cities in the country, where protesters demand resignation or arrest of President Yoon Suk-yeol. This political turmoil has had a direct impact on financial markets, especially digital assets and shares of local companies.
It is probably due to this situation that bitcoin experienced a slight drop from an average of $96,000. at just over $93,000 before recovering to around $95,700, as can be seen in theEthereum-moneda-nacional-calculadora/” target=”_blank” rel=”noreferrer noopener”> CriptoNoticias Price Calculator.
This volatility became particularly noticeable in South Korea, where BTC fell much more than its global market price, although only for a few minutes, before recovering.
The price of BTC against the won fell sharply. Source: UpBit.
Reporter Colin Wu commented about the situation that all South Korean won trading pairs on South Korean platforms suddenly began to plummet.
“The price of bitcoin fell to $66,500, and that of XRP to $1.16. Currently, they are recovering. This could be related to the martial law declared by the South Korean president,” Wu said. “At this moment, all Cryptocurrency exchange platforms in South Korea are out of service and operating is almost impossible,” he added hours ago.
He noted that South Korea’s largest cryptocurrency exchange platform, Upbit, issued a statement informing that Upbit applications (Android, iOS) and Open API services are temporarily suspended due to an increase in traffic and are experiencing delays.
“Today’s martial law news caused massive panic selling, excessive platform traffic caused disruptions, and the lack of market makers prevented prices from synchronizing in a short period of time,” Wu explained.
This drop opened a brief window for price arbitrage, allowing investors to buy BTC in South Korea at a lower price and sell it in other markets. where the price was highertaking advantage of the temporal discrepancy in values.
Thus, the government’s promise of unlimited liquidity seeks to be a bulwark against the potential economic destabilization derived from this crisis.
This article was created using artificial intelligence and edited by a human Editor.
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