South Korea faced an extraordinary political crisis on December 3, 2024, when President Yoon Suk Yeol declared martial law during a surprise late-night broadcast.
The announcement, justified as a response to “anti-state threats,” triggered political turmoil, public protests, and a ripple effect on financial markets, particularly the cryptocurrency sector. Here’s how the events unfolded and impacted the markets.
A Controversial Declaration: Martial Law Announced
In his late-night address, President Yoon accused opposition lawmakers of undermining the government and aligning with “pro-North Korean forces.”
He cited their actions, including efforts to impeach key prosecutors and slash budget proposals, as reasons to declare martial law.
This unprecedented move since South Korea’s democratisation in 1987 granted the military sweeping powers to enforce bans on protests, restrict media and maintain order.
The announcement led to the immediate deployment of military personnel at the National Assembly, where lawmakers and protesters clashed with barricades and armed forces.
Helicopters hovered over parliament as thousands of South Koreans rallied outside, chanting slogans against martial law. Critics, including members of Yoon’s party, condemned the decision as unconstitutional and politically motivated.
Opposition leader Lee Myung called on lawmakers and citizens to oppose martial law. Thousands responded, leading to a highly charged atmosphere around parliament, but lawmakers managed to convene and vote.
Martial Law Lifted After Legislative Intervention
In the early hours of December 4, parliament decisively struck down the martial law declaration with 190 out of 300 members voting to annul it. President Yoon, facing mounting pressure from both the opposition and the public, lifted martial law shortly after the vote.
While this quick reversal prevented further escalation, it failed to address the deep-seated political issues at play.
Yoon’s leadership had already been under fire due to plummeting approval ratings and corruption scandals involving his administration and First Lady.
The martial law fiasco added fuel to the fire, with calls for his resignation and impeachment growing louder.
Globally, the declaration and its reversal drew widespread attention. The White House expressed concerns, emphasising the importance of maintaining democratic norms. South Korea’s domestic politics, now in a heightened state of volatility, has become a key focus for international observers.
Bitcoin Surge and the Kimchi Premium
The political chaos in South Korea also impacted its financial markets, with the cryptocurrency sector witnessing notable activity.
South Korea’s “Kimchi Premium,” where Bitcoin and other cryptocurrencies trade at significantly higher prices on local exchanges, was amplified during the turmoil.
At the height of the volatility, Bitcoin’s price on South Korean exchanges surged to $65,000, far below the global average of around $93,000. This disparity prompted a spike in local buying volume, as traders sought opportunities despite regulatory constraints limiting arbitrage.
The surge in domestic demand and the inability to equalize prices through arbitrage contributed to the volatility, potentially aiding the recovery in global markets.
Once martial law was lifted, the crypto market began to stabilize. Bitcoin, Ether, and other assets saw price rebounds of 2.4%, 3.3%, and 9.2%, respectively, as confidence returned.
The Kimchi Premium narrowed slightly, but the incident underscored South Korea’s unique role in global cryptocurrency trading and the impact of political shocks on the market.
Conclusion
President Yoon’s short-lived declaration of martial law created a political and economic shockwave in South Korea, shaking public trust and straining the country’s democratic institutions.
While swift parliamentary intervention brought an end to the crisis, the fallout continues to loom over the nation’s political landscape.
In the cryptocurrency market, the chaos highlighted the sensitivity of digital assets to regional events. The amplified Kimchi Premium and its impact on Bitcoin’s local price underscored the complexities of South Korea’s market dynamics.
As global markets stabilize, the episode serves as a reminder of how interconnected political stability and financial confidence remain, particularly in a world where crypto plays an increasingly central role.
