Bitcoin’s price plunged on Upbit’s, South Korea’s largest cryptocurrency exchange, Tuesday, dropping as low at $61,600 after Yoon Suk Yeol’s declaration of martial law.
Yoon announced the measure in an address on late night television, and it was accompanied by accusations that South Korea’s leading opposition party sympathized with North Korea. CNN. Yoon is reported to have accused the party “clear anti-state behavior aimed at inciting rebellion.”
Priced in South Korean won, Bitcoin’s value fell as low as ₩88,266,000 on Upbit, darting down 33% from ₩132,429,000 in less than 30 minutes. Since then, Bitcoin’s price has slightly recovered on Upbit, valued around ₩127,000,000 worth—about $88,600 as of this writing.
CoinGecko reports that the Bitcoin price has dropped 1% since yesterday, to $95,900. At the time of writing, this meant that Bitcoin was trading at an 8% discount, just a few days after South Korea’s President declared martial law.
The South Korean Bitcoin exchange’s reduced price reflects the liquidity that is trapped in a central location, Bitwise Senior Investment Strategy Juan Leon said. Decrypt Statement. He said that even though Bitcoin is decentralized and trades 24 hours a day, dislocations could still occur when “idiosyncratic situations in a locality” create sudden confines.
Citation "a temporary increase in traffic," Upbit warned users Tuesday that its services had been delayed, according to a blog post translated by Decrypt. A brief update from the exchange stated that the problem was resolved and apologized to customers for any inconvenience.
Upbit also experienced a sharp drop in the Ripple linked XRP price as the South Korean leader made his accusations. While the price of XRP has since recovered to ₩3,400 ($2.37) on Upbit, it fell as low as ₩1,623 (1.13) on the exchange—a sudden 52% drop in value.
According to CoinGecko XRP was traded at $2.52 on Tuesday. Upbit’s discrepancy was a discount of 6.3% for XRP, a token which has been among the best-performing on the market in recent weeks.
Google Finance reports that the South Korean won exchange rate against the U.S. Dollar also dropped by almost 3% after the announcement.
CoinGecko reports that Upbit trading volumes soared 32% in the last day, to reach $23 billion. XRP accounted nearly a third (approximately $6.5 billion) of Upbit’s trading volumes.
Bithumb is a South Korean exchange that also saw a flurry in trading. According to CoinGecko, the exchange’s trading volume rose 20% to $4.6 Billion on Tuesday as $1.4 Billion in XRP was traded.
The declaration of martial laws in South Korea Tuesday created an opposite effect as digital assets such as Bitcoin were trading at a discounted price on crypto exchanges. “Kimchi Premium.” The phenomenon, named after the South Korean popular dish of the same name, has been around for years and just re-emerged in this year.
Kimchi Premium is closely tied to South Korea’s tight capital controls. It is also based on the difficulty of moving money within and outside the country. Analysts pointed out that South Korean traders have been resurgent this year. The Kimchi Premium for Bitcoin was as high as 10 percent in March.
Kimchi Premium for Bitcoin in 2018 was 54%. However, historically it has been hard for traders to take advantage of this. The dynamic that once provided a profitable arbitrage opportunity to Bitcoin sellers in South Korea has now worked the other way.
Andrew Hayward is the editor
Editor's note: This story was updated after publication with additional details.