South Korea is in political chaos after President Yoon Suk Yeol was impeached and suspended for trying to declare martial law.
Acting President Han Duck-soo is now trying to keep the country afloat, juggling financial stability, diplomatic relations, and a growing domestic scandal.
Han wasted no time. Within hours, he called U.S. President Joe Biden, promising that South Korea’s policies, especially its critical alliance with the U.S., would remain solid.
“South Korea will carry out its foreign and security policies without disruption,” Han’s office said, stressing that the impeachment drama would not affect the nation’s international commitments. That message was meant for nervous allies and investors, both rattled by Yoon’s sudden fall from power.
Prosecutors are already circling Yoon. On Sunday, he ignored a summons for questioning over his December 3 martial law declaration. Officials have promised to issue another order, with potential charges that could include insurrection, abuse of authority, and obstructing civil rights.
Markets panic as central bank jumps into action
The Bank of Korea immediately stepped up, vowing to keep the economy on track and control the volatility shaking the won and the stock market. The currency hit its weakest level against the dollar since the 2008 global financial crisis, while the Kospi index saw steep losses.
“The Bank of Korea intends to utilize all available policy instruments in conjunction with the government,” the central bank said in a rare Sunday statement. The bank emphasized that this crisis is different from past political upheavals.
Global trade tensions, intensified competition, and external economic risks make the current situation far more dangerous. Markets had already taken a hit. Now, the Bank of Korea fears overlapping domestic and global pressures could spiral into deeper financial instability.
Acting President Han told his team to monitor markets closely and take “bold, immediate” action if the situation worsens. Finance Minister Choi Sang-mok echoed this urgency, announcing plans to release updated policies before the end of the year.
Crypto’s wild ride during the chaos
Amid this political and economic disaster, South Korea’s crypto market stood out for its bizarre reaction. After Yoon’s martial law fiasco, Bitcoin prices plummeted on Korean exchanges, hitting $71,814.99, far below the global average of $93,600.
From November 5 to 28, South Korea’s daily crypto trading volume reached $9.4 billion, outpacing the $7 billion traded on the Kospi. While traditional stocks dropped 3.4% during the same period, an index tracking the top 100 cryptos surged by 53%.
Over 7 million South Koreans, nearly 15% of the population, are registered on crypto exchanges. Many of them missed Bitcoin’s early rally and are now chasing smaller, riskier coins. These altcoins account for more than 80% of trading volume on local platforms, boosted by promotions like Bithumb’s zero-fee campaign.
South Korean regulators, however, are keeping a tight grip. Spot Bitcoin ETFs remain unapproved, forcing traders to look overseas. Leverage-hungry investors have turned to foreign funds, with products tracking Bitcoin and Ether among the most-bought overseas securities last month.
Meanwhile, South Korea is also bracing for external challenges. President-elect Trump’s trade policies could hammer the export-heavy economy. Trump has promised more tariffs on Chinese goods, which would hit South Korea’s supply chains hard.
As China’s top supplier of intermediate goods, South Korea depends on stable trade flows to keep its semiconductor and automotive industries running.
Trump has also criticized South Korea’s financial relationship with the U.S., calling it a “money machine” and demanding that the country pay more for hosting American troops.
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