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South Korea’s political unrest, and the declaration of martial law, triggered a sudden crash in cryptocurrency prices.
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XRP suffered a 54% drop in UpBit and struggled to recover, compared to Bitcoin which recovered much faster.
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South Korea’s crypto market, which is a major player on the global XRP exchange, has reportedly slowed down XRP’s rise to $3
The price crash of XRP in South Korea shows the crypto market’s sensitivity towards political events. Last Tuesday, the president declared martial law, triggering a flash crash on global markets. Bitcoin (BTC), and XRP were particularly hard hit. According to analytics platform Kaiko the XRP price on South Korea’s UpBit Exchange fell by 54% and struggled to recover in comparison to Bitcoin’s faster recovery.
Bitcoin Flash Crash
The BTC-KRW pair dropped sharply on South Korea’s two main exchanges UpBit Bithumb. UpBit saw the biggest drop, with Bitcoin prices plummeting 30% to 89 Million Korean Won (about $63000).
The initial panic drove prices down. However, net buying activity eventually stabilized the BTC/KRW pair. The market recovered its composure and showed resilience.
XRP suffers the most severe decline
XRP’s fall was more severe than Bitcoin’s. UpBit saw a 54% drop in XRP’s price. The decline continued into the next day. Unlike Bitcoin, the XRP-KRW price struggled to reach pre-crash levels.
Kaiko’s tick-trade data shows that although the buying pressure increased on Tuesday evening, XRP recovered at a slower pace.
XRP’s role in South Korea’s Crypto Market
The South Korean crypto market is one of the major players in the global XRP trade. It is responsible for some of the largest transaction volumes. Local exchanges see XRP trading volumes that are higher than Binance, which is the world’s biggest crypto platform.
CoinMarketCap data shows, for example, that UpBit, South Korea’s largest exchange, has $2.85 billion worth of XRP trading volume in a 24-hour period, while Binance is second with $2.4 billion. South Korea is a major factor in XRP’s market performance.
Analyst Dom believes that if not for the political turmoil XRP would have reached $3 this week. He used this example in order to show that despite South Korea’s impact on the global market, XRP was still high. This was meant to counter critics who thought the cryptocurrency’s rally had reached its peak.
“Martial Law couldn’t keep XRP down …”
The Impact of Regulatory Barriers
The strict regulations of South Korea played a dual role in the crash. On the one hand, it limited cross-border arbitration, which made local exchanges’ price differences worse. This has historically led the “Kimchi Premium” where cryptocurrencies are traded at a premium – or sometimes a discounted price – on South Korean platforms such as UpBit and Bithumb.
On the other hand, the regulations helped contain the crash and prevented it spreading across the global markets.
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