Amid the sudden declaration of martial law by President Yoon Seok-yeol, major domestic virtual asset prices temporarily plummeted 30-50% late on the 3rd, and it was found that foreign capital of at least hundreds of billions of won had flowed into Upbit alone, trying to 'pick up' the assets sold by domestic investors. This has confirmed the vulnerability of the domestic market to political risks, and it is expected that the movement of domestic investors to overseas exchanges will become visible.
On the 4th, the virtual asset information site LookOnChain said, "After the declaration of martial law in Korea, the price of virtual assets plummeted, and many whales (large institutional investors) transferred a large amount of USDT with the goal of bottom-fishing, and within an hour after the declaration of martial law, 163 million dollars (about 220.7 billion won) worth was transferred to the Korean exchange Upbit."
USDT is a stablecoin pegged to the US dollar, with little price fluctuation and high demand for remittance. The US virtual asset media Coindesk explained that "USDT is mainly used to buy cryptocurrencies" and that the inflow "indicates a hunt for special offers."
In fact, on the 3rd, Bitcoin was traded at around 130 million won on Upbit. However, as President Yoon began to read the statement at 10:23 pm, the price fell, reaching 88.26 million won at 10:57 pm. It then quickly recovered, almost reaching the previous price around 12:30 am on the 4th. This means that intensive low-price buying took place in a short period of time after the sharp drop.
The same was true for Ripple. It fell from around 3,700 won the previous day to 1,623 won at 10:57 pm, but buying pressure immediately flowed in, and an hour and a half later, it had almost recovered the previous price.
In this process, Upbit's trading volume reached the highest level of the year. According to CoinGecko, Upbit's daily trading volume on that day was $29.2 billion, nearly double the previous annual high of $16 billion on November 13. It is not confirmed how much stable coin was inflows to Bithumb, but since this exchange also recorded the highest annual trading volume that day, it can be estimated that a similar event occurred.
The virtual asset industry is closely monitoring whether there will be an outflow of domestic investors. The recent decision by the Democratic Party to postpone the taxation (22%) on virtual asset transfer and lending income for 2 years had improved the mood, but the political issue has poured cold water on it again.
A virtual asset industry official said, "The government's policy is to induce domestic investors to trade virtual assets on domestic exchanges under the regulation of financial authorities," but "we are concerned that domestic investors may prefer overseas exchanges due to this incident."
After the lifting of martial law on the 4th, the virtual asset trading prices at domestic exchanges have completely returned to the previous 'reverse kimchi premium' state, where they are cheaper than overseas exchanges. According to the related information site Kimpregi, as of 2:45 pm on the 4th, Bitcoin has a reverse kimchi premium of 0.7-0.8%, and Ripple has a reverse kimchi premium of 0.3-0.4%. At this level of price difference, foreign investors will not come to Korea, but if a large reverse kimchi premium occurs, foreign capital is expected to flow in immediately to take advantage of the difference.
A virtual asset industry official said, "The domestic political risk has not completely ended yet," and said, "We will closely monitor the movements of domestic and foreign investors and strengthen the system to facilitate more smooth trading."
- Reporter Maeng Jun-ho
- next@sedaily.com
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