South Korean won continues to depreciate, CryptoQuant: South Korea needs new donation actions, BTC adds to reserves

As the won-dollar exchange rate approaches a 15-year high, the market is once again discussing the stability of the Korean economy. Some have associated the current situation with the nationwide fundraising campaign that South Korea launched during the 1998 Asian financial crisis, when the IMF provided bailout funds. At that time, the Korean people collectively donated gold to support the country's foreign exchange reserves. CryptoQuant founder Ki Young Ju pointed out that the USDT/KRW exchange rate has a 3% premium, and South Korea may need Bitcoin as a strategic reserve asset.

USDT has a 3% premium, South Korean whales are accumulating USD

Ki Young Ju tweeted that the won-dollar exchange rate is about to reach a 15-year high, and he recalled the 1998 event when South Korean companies and people collectively donated gold as asset reserves. He said South Korea may need a digital gold collection campaign this time, as it is the country most in need of a Bit strategic reserve. He also pointed out that South Korean whales are accumulating USDT, and the USDT/KRW trading price on Upbit is currently about 3% higher than the bank exchange rate, with USDT priced at 1,559 KRW.

Will the public donate Bit to save the government? New donation campaign

Reviewing the 1997 financial storm, it all started in Thailand. The Thai government had repeatedly planned to devalue the Thai baht to make exports more competitive. Many Asian countries (such as Thailand) pegged their national currencies to the US dollar to attract more foreign investment, but this also made their monetary policies less flexible. At the same time, companies and banks borrowed heavily in foreign debt, forming asset bubbles, especially in the real estate and stock markets. The foreign exchange reserves of these countries were unable to support the excessive foreign currency debt.

At this time, hedge funds in the financial market began to short the Thai baht on a large scale. The financial giant George Soros and his Quantum Group of Funds were among the important participants. In July 1997, the Thai government announced the abandonment of the fixed exchange rate system, and the Thai baht quickly depreciated, causing the cost of foreign currency debt to soar, and companies and banks were unable to repay their debts, leading to the collapse of the financial system.

In 1997, South Korea's bubble was also burst, and it declared bankruptcy on December 3. It signed an agreement with the IMF and borrowed $55 billion, which was also seen as South Korea's greatest national humiliation after ceding the Korean Peninsula to Japan. At that time, the government, Samsung Group, Daewoo Group, KBS, and others launched a donation campaign, encouraging the public to donate their household gold jewelry to the country, and ultimately raised 225 tons of gold. In the Korean drama "Twenty-Five, Twenty-One", the mother of Ro Hee-do participated in the donation campaign.

Is it impossible for South Korea to include Bit in its asset reserves?

The depreciation of the won is mainly influenced by the following factors:

• Slowdown in South Korean exports: As an export-oriented economy, South Korea's export performance directly affects its economic fundamentals.
• Geopolitical risks: The geopolitical uncertainties on the Korean Peninsula and the overall instability of the security situation in the Asia-Pacific region have further exacerbated the risk aversion of foreign investors towards won-denominated assets. This includes the already tense inter-Korean relations and the recent declaration of martial law by South Korean President Yoon Seok-yeol. Meanwhile, across the sea, Japanese Prime Minister Kishida Fumio is also facing a continued decline in his approval rating.
• Impact of speculative forces: During the 1997 Asian financial crisis, the fierce attacks by speculators like Soros and his Quantum Fund on Asian currencies were one of the important drivers of the crisis. They used financial derivatives to conduct large-scale short-selling operations, and the South Korean won was not spared, being forced to depreciate sharply and ultimately triggering a full-blown economic crisis. Currently, similar speculative behavior may be repeated in the stablecoin and cryptocurrency sectors, further exacerbating the challenges facing South Korea.

Although the idea of establishing a Bit strategic reserve may seem radical, there are precedents. For example, El Salvador has incorporated Bit into its national legal tender system and continues to increase its Bit assets. In addition, many large international institutions have also begun to view Bit as a core asset in their investment portfolios. Even the US government under the leadership of Trump and the Republican Party incorporating Bit reserves, or even using Bit to repay US debt, does not seem impossible.

(The topic of Bit reserves is constantly emerging! Federal Reserve Chairman Powell: The Fed is not allowed to hold Bit and other crypto assets)