South Korea witnessed a dramatic surge in cryptocurrency trading, with a record-breaking $34.2 billion in 24-hour spot trading volume across its major exchanges. This unprecedented trading activity occurred amid a political crisis that led to the declaration of emergency martial law by President Yoon Suk-yeol on December 3, 2024.

The trading spike, which occurred between December 2 and 3, was driven largely by a combination of political uncertainty and panic selling by local traders. 

South Korea’s top cryptocurrency exchanges, including Upbit, Bithumb, Coinone, Korbit, and Gopax, saw an enormous surge in trading volumes, according to CoinMarketCap data, . Upbit, the largest exchange in South Korea, processed over $27 billion in crypto transactions alone during this 24-hour period. This significant volume dwarfed the $18 billion recorded on December 2, which had already outpaced the daily trading volume of the country’s stock market.

The Impact of Martial Law on the Crypto Market

President Yoon’s decision to declare emergency martial law on December 2 added to the uncertainty that sparked a rush to sell cryptocurrencies. The president cited "anti-state" forces targeting the opposition left-wing political party, claiming these groups were paralyzing state affairs. His address, which came late on Tuesday night, framed martial law as a necessary response to preserve South Korea’s democracy and safety.

As the news of martial law spread, cryptocurrency prices on South Korean exchanges experienced dramatic drops. Bitcoin, for example, plummeted by as much as 33% to 61.2 million Korean won (approximately $61,200) on Upbit. This was a stark contrast to the global price of Bitcoin, which was hovering around $95,000 on other exchanges like Coinbase and Binance.

A Sharp Drop in Prices and the "Kimchi Discount"

The price drop of Bitcoin and other major cryptocurrencies on South Korean exchanges led to what is known as the "kimchi discount." This phenomenon has previously seen traders exploit the price differences between local exchanges and those in the West. However, this time, the prices on South Korean exchanges were considerably lower than those on global platforms. Ethereum and XRP also saw significant price reductions, with Ethereum trading at a 7% discount and XRP losing more than half of its value.

TRON (TRX), another notable cryptocurrency, saw a massive surge in trading volume. The coin's market capitalization soared by $36 billion, and its trading volume increased by almost 500% on global exchanges. However, its price jumped from $0.21 to $0.43, a 95% increase in just one day. 

Political Backlash and Market Recovery

Despite the initial shock, the situation took a turn when President Yoon’s cabinet reversed the martial law decree within hours. The reversal came after intense pressure from South Korean lawmakers who condemned the emergency measure and called for Yoon's resignation. 

As the political situation calmed, crypto prices began to recover. By the afternoon, Bitcoin had regained much of its lost value on South Korean exchanges, narrowing the gap with global markets. Ethereum and XRP also saw their discounts decrease, with Bitcoin and Ethereum trading less than 1% discount on South Korean platforms at the time of writing.