XRP, Won, and broader crypto market tanks as South Korean court issues arrest warrant for impeached President Yoon

Weeks of escalating political instability fears continue to torment South Korean markets. XRP’s price is down 2% in the last 24 hours, while the won continues to trade below 1,470 per dollar. The arrest warrant issued against former President Yoon Suk Yeol has exacerbated market fears both locally and globally.

On Tuesday, the Seoul Western District Court issued a search warrant for Yoon’s residence and an arrest warrant for his attempts to impose martial law during a live televised address on December 3. 

South Korea issues arrest warrant for impeached President Yoon https://t.co/yYqMG3U8qs

— Financial Times (@FT) December 31, 2024

This marks the first time in South Korean history that an arrest warrant has been issued against an incumbent president. The warrants followed Yoon’s repeated refusals to comply with the summons from the Corruption Investigation Office for High-ranking Officials (CIO), which is investigating him for treason and abuse of power.

Yoon’s televised imposition of martial law, justified by claims of addressing “anti-state elements” and “North Korean threats,” drew sharp criticism. South Korea’s parliament quickly overturned the move on December 4, but the political fallout has been severe. 

The ripple effect on cryptocurrency markets

South Korea’s political crisis has extended its influence to the cryptocurrency sector. Major cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), and XRP, experienced a brief slump of up to 4% during Yoon’s short-lived martial law declaration. 

Domestically, crypto trading spiked to its second-highest level this year, with retail traders actively pursuing “high-momentum” altcoins such as XRP and Dogecoin.

Although the crypto market recovered after parliament overturned the martial law order, recent price movements continue to reflect volatility. Bitcoin fell below $93,000, currently changing hands at $92,500, a 0.6% decline over the past 24 hours, with its trading volume surging by 62% to go past $55 billion. 

Ethereum dropped 2.4%, trading slightly above $3,300, while its trading volume increased by 56%, reaching $25.52 billion at press time, per Coingecko data.

XRP, closely tied to South Korean retail trading trends, saw its price decline by 2% in the last 24 hours on the country’s largest digital currency exchange Upbit. It is currently trading below 3,000 won, going down 12% over the past week.

The downturn coincides with broader market sentiment, as the global cryptocurrency market cap decreased by 1.3% to $3.22 trillion. However, trading volumes surged by 40%, and investors could be looking to cash in on profits as 2024 nears sunset.

Won hits 16-year low as political tensions amplify economic struggles

South Korea’s Won has taken a significant hit during this period of political instability. The won fell below 1,470 per dollar, marking its lowest levels in 16 years, according to market data from Trading Economics. The currency’s value has declined by over 12% this year, making it the weakest currency in emerging Asia.

The economic downturn has been fueled by political tensions, concerns over economic mismanagement, and fears of US tariffs. The Bank of Korea’s decision to reduce its benchmark interest rate to 3% in December, following inflation levels dropping to 1.9%, has done little to offset the won’s decline. 

The central bank’s plans for further rate cuts next year aim to stabilize the monetary system, though challenges remain with a strong dollar driven by the Federal Reserve’s hawkish policies and the incoming US administration’s outlook.

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