Bitcoin Plunges Down Over 30% on Upbit After South Korea Declares Martial Law

South Korea’s cryptocurrency market faced brief chaos as Bitcoin’s price plummeted by over 30% on Upbit, one of the country’s largest exchanges, following President Yoon Suk Yeol’s declaration of martial law.

South Korea, one of the world’s largest crypto markets with trading volumes exceeding its stock market, saw major disruptions across exchanges following the announcement.

The cryptocurrency fell by to about $62,000 shortly after the announcement, leaving a huge disparity from global markets before immediately bouncing back to $89,000. This led to major trading chaos and arbitrage gaps in the market.

South Korea Martial Law Triggers Panic Sell-off on Upbit

In his speech, President Yoon declared martial law, citing the need to protect South Korea from alleged threats by pro-North Korean forces.

“I declare martial law to protect the free Republic of Korea from the threat of North Korean communist forces, to eradicate the despicable pro-North Korean anti-state forces that are plundering the freedom and happiness of our people,” He declared in the televised address.

President Yoon’s declaration came in response to allegations of anti-state activities by the opposition-controlled parliament possibly connected to North Korea.

Within minutes of the President’s speech, Bitcoin plunged sharply by 30% from $96,000 to $62,000 on Upbit, specifically in the Korean won (KRW) trading pair. The sudden price movement however lasted only 15 minutes as Bitcoin quickly rebounded to above $89,000 on Upbit, albeit still leaving a significant $4,000 arbitrage gap compared to global markets.

Bitcoin wasn’t the only cryptocurrency affected. XRP also dropped to $1.16 (1,623 won) before recovering to $2.4 (3,412 won), while Dogecoin and Cardano saw similar volatility in their Korean Won trading pairs.

Exchanges Struggle to Stabilize

In the aftermath, Upbit announced the suspension of its applications and open API services, citing heightened traffic as the primary cause.

Additionally, global exchanges also witnessed a drop in Bitcoin’s price, with the asset sliding from $96,000 to $93,600.

Although the market began recovering shortly after, KRW-traded cryptocurrencies on South Korean exchanges continue to trade at a discount compared to global markets.