Martial law is in effect in South Korea with immediate effect. As political tension mounts, the Bitcoin price plummeted by nearly a third on local crypto exchanges.

According to various media reports, South Korean President Yoon Suk Yeol unexpectedly appeared on television last night and announced martial law. Yoon accused the democratic opposition of "paralyzing" parliament and sympathizing with the arch-enemy North Korea. By introducing martial law, the president said he wants to "restore order in the country" and "protect South Korea from the threat of North Korean communist forces and eradicate the vile pro-North Korean, anti-state forces." Concrete measures, however, were not mentioned.

#SouthKorea 🇰🇷: Korean military forces are taking up positions in the National Assembly building in #Seoul, following the declaration of martial law by president Yoon.

Scenes like this would be unthinkable in a healthy democracy like ROK, yet this is what we are watching. pic.twitter.com/GX3Z4MW996
— Thomas van Linge (@ThomasVLinge) December 3, 2024

While the direct link between the political situation and Bitcoin may not seem obvious, the impact on the crypto market is significant. The sudden political uncertainty led to a massive wave of selling on the South Korean crypto exchange UPbit, where Bitcoin temporarily dropped to 88,266,000 South Korean won (about $62,000). It has since recovered and is trading around 130,000,000 KRW.

This kind of situation shows how macroeconomic and political uncertainties often spill over into the crypto market. Both UPbit and Bithumb indicated that their platforms are currently experiencing performance declines due to a surge in users. Normally, these platforms are known to crypto investors for arbitrage trading. International crypto exchanges also saw declines, albeit less volatile. On Coinbase, the BTC price temporarily dropped to about $93,600.