South Korean investors choose XRP over Bitcoin as political crisis deepens – DL News

When a country is engulfed in a crisis that punishes its fiat currency, households and businesses tend to flock to Bitcoin and Tethers USDT to protect their wealth.

Not South Korea.

Even as citizens take to the streets to demand President Yoon Suk Yeol’s ouster, crypto traders pile into XRP over Bitcoin and other assets.

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

On Tuesday, crypto trading on local exchanges reached a huge $34 billion in volume, according to local crypto news media, Digitally active.

Martial law

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

It also sent the winner hurtling. Cryptocurrencies mirrored the dive at double-digit levels on local exchanges.

Bitcoin fell an astonishing 33% to $61,000, and XRP lost half its value, receiving a 63% increase in the rest of the world over the past seven days.

But those prices took place in a South Korean bubble, and the gap between those valuations and actual prices elsewhere created a monumental gap.

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

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

‘I expect Korean trade volume to experience record high and extreme volatility.’

— Ian Cho, ITAM Games

Now investors are preparing for volatility.

“I expect Korean trade volume to see a record high and extreme volatility,” Cho said.

As it happens, South Koreans have been bracing for a political crisis after months of legislative crisis and a steady decline in victory; it crashed low for two years short Wednesday and is down 7% for the year.

Upbit rallies

“After months of impeachment, the president declared martial law without informing lawmakers of the same party or his closest aides, and they are all against him now.” said Ki Young Ju, CEO of CryptoQuant, the X.

Amidst the turmoil, Upbit, one of the country’s largest exchanges, has soared.

Data analytics firm Kaiko reported that the platform — along with Coinbase — has made the biggest gains in market share.

It now accounts for nearly 11% market share in South Korea, up from about 4% in July.

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

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

Chan also said that there has not been a significant outflow of Bitcoin from exchanges and this is an indication that there is no significant outflow from the country.

The winner falls

A languishing won is giving South Korean investors a headache.

While a poor exchange rate for the won has always drawn more people into crypto, “anxiety about the KRW is a big driver of strong selling sentiment,” Cho said.

But that is not the only reason why the crypto fell yesterday.

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

Negative kimchi premium

Yet the Koreans are now in a crypto market that has been turned on its head. Usually, its crypto-crazy Korea, where Bitcoin and its ilk achieve the highest prices worldwide, the so-called kimchi prize. But now it has become negative.

Chan said the development shows how Koreans are still wary of viewing crypto as a safe haven.

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

CryptoQuant’s Ju echoed the sentiment.

“Bitcoin’s kimchi premium hits all-time low,” he said on Tuesday. “Should Bitcoin not rise in times of political instability?”

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