Whenever a country is hit by a crisis that punishes its fiat currency, households and businesses tend to turn to Bitcoin and Tethers USDT to protect their wealth.

Not South Korea.

As citizens take to the streets demanding the ouster of President Yoon Suk Yeol, crypto traders are pushing for XRP instead of Bitcoin and other assets.

“In the last 24 hours, XRP generated four times more trading volume than BTC on Upbit, Korea’s largest crypto exchange,” said Zhong Yang Chan, head of research at CoinGecko DL News.

According to local crypto news outlets, crypto trading on local exchanges reached a whopping $34 billion in volume on Tuesday. Digital asset.

Martial law

The crisis was sparked that night, local time, when the president suddenly declared martial law in response to a conflict with the political opposition in Seoul. The decree upended decades of democratic tradition, outraged lawmakers and citizens and sparked a push for his impeachment.

It also caused the won to drop. Cryptocurrencies reflected the double-digit plunge on local exchanges.

Bitcoin fell a staggering 33% to $61,000 and XRP lost half its value, despite a 63% rise in the rest of the world in the last seven days.

But these prices emerged in a South Korean bubble, and the gap between these valuations and actual prices elsewhere created a huge gap.

For fast-moving traders, it was a rare opportunity to buy cryptocurrencies in South Korea and immediately reap big profits by selling assets on other exchanges.

“Yay ​​for arbitrage,” said Ian Cho, a South Korean founding member of ITAM Games DL News.

“I expect Korean trading volumes to experience all-time highs and extreme volatility.”

— Ian Cho, ITAM Games

Now investors are bracing for volatility.

“I expect Korean trading volumes to experience all-time highs and extreme volatility,” Cho said.

In fact, South Koreans have been bracing for a political crisis after months of legislative deadlock and the won’s steady decline. It briefly fell to a two-year low on Wednesday and is down 7% for the year.

Upbit rallies

“Faced with months of calls for impeachment, the president declared martial law without informing his party’s lawmakers or his closest aides, and now they are all against him,” CryptoQuant CEO Ki Young Ju said on X.

Amid the turmoil, Upbit, one of the largest exchanges in the country, recovered.

Data analytics firm Kaiko reported that the platform – along with Coinbase – had seen the largest market share gains.

Market share in South Korea is now nearly 11%, up from about 4% in July.

Crypto trading has also overtaken the local stock market, known as Kospi.

Crypto trading on local platforms reportedly averaged $9.4 billion between November 5 and November 28, surpassing the Kospi index average of $7 billion Bloomberg News.

Chan also said that there has been no significant outflow of Bitcoin from exchanges and this is an indication that there are no significant outflows from the country.

The won falls

A weakening won is causing headaches for South Korean investors.

While a poor exchange rate for the won has always lured more people into crypto, “KRW fear is now a major factor driving strong selling sentiment,” Cho said.

But that’s not the only reason why crypto plummeted yesterday.

“It was also because the centralized Korean exchanges were unable to handle the traffic,” he said.

Negative kimchi premium

Yet Koreans now find themselves in a crypto market that has been turned on its head. Normally it is crypto-crazy Korea where Bitcoin and Co. achieve the highest prices worldwide, the so-called kimchi premium. But now it has become negative.

Chan said the development shows that Koreans are still cautious about viewing crypto as a safe haven.

“Korean investors view crypto less as a safe haven and more as a risk-taking instrument,” he said.

Ju from CryptoQuant echoed this sentiment.

“Bitcoin’s kimchi premium hits all-time low,” he said on Tuesday. “Shouldn’t Bitcoin Rise in Times of Political Instability?”

Pedro Solimano is a market correspondent based in Buenos Aires. Do you have a tip? Send him an email at [email protected].