In South Korea, the cryptocurrency market experienced a sudden and sharp flash crash. The main trigger was the plunge of the local currency, the South Korean won, to a record low.
Bitcoin’s price in South Korea nosedived to 88,197,000 KRW, reaching its lowest point since October 5. However, it later rebounded to 132,000,000 KRW. Even with the recovery, it was still down nearly 40% from its peak this year.
Similar price trends were observed among other altcoins. Ethereum tumbled to 4,210,630 KRW, its lowest since November 9. Ripple (XRP), Stellar Lumens, and Solana also suffered double-digit declines.
The root cause of this crash was a political crisis in South Korea. President Yoon Suk Yeol’s decision to declare emergency martial law due to accusations against the opposition party of having ties with North Korea led to significant unrest. The South Korean won, already one of the poorest-performing Asian currencies with a more than 13% drop this year, hit a new low.
As the political crisis intensified, many investors panicked and rushed to liquidate their cryptocurrency assets, resulting in the plunge of Bitcoin and other altcoins. Historically, during major events such as the start of the war in Ukraine and the COVID-19 pandemic, similar sell-offs have occurred, followed by rebounds as investors adapt. This pattern seems to be repeating itself as BTC and altcoins recovered after the initial crash.
Despite the short-term turmoil, cryptocurrencies possess strong fundamentals. In particular, regulatory developments in the United States are anticipated to improve, which could potentially have a positive impact on the long-term outlook of the cryptocurrency market.
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