This, combined with the disappearance of key market players and a liquidity crisis, caused Bitcoin prices to drop $30,000 on South Korean exchanges following President Yoon Suk Yeol’s declaration of martial law.

On December 3, President Yoon announced in a television speech that he was declaring martial law. The President explained that he took this decision for the reasons of “eliminating elements against the state” and “countering threats from the communist forces of North Korea.”

This announcement immediately led to market disruptions, with the price of Bitcoin falling to 92 million Korean won (about $65,000) on the South Korean exchange Upbit. When the cryptocurrency market experienced such sudden declines, analysts stated that this was associated with the sudden loss of liquidity.

Trader Ltd stated that the lack of liquidity led to a serious imbalance between buying and selling prices, accounting for a difference of 10 percent.

Ltrd, in his post on the social media platform

According to the analyst, trading in the South Korean cryptocurrency market is a very difficult and limited process, so only a few players can provide liquidity in the market, which can lead to large price fluctuations.

Ltrd stated that limited market maker participation increased the severity of price fluctuations. He emphasized that the fact that only a few people are market players in South Korea triggers such volatility.

In addition, he said, there was a huge selling pressure in all markets, causing prices to fall rapidly. However, in Ltrd’s opinion, the market reaction was very harsh and he noted that if more liquidity providers were involved in the market, such a large price drop would not have occurred.

Hours after the declaration of martial law, 190 lawmakers in the South Korean parliament voted to override this decision. President Yoon accepted this decision and lifted the martial law orders, thus reducing the tension in the markets.

As markets recovered, Bitcoin prices began to rise again. At the time of publication, Bitcoin was trading at around 135 million Korean won (about $95,000).

This incident once again revealed how sensitive the South Korean cryptocurrency market is to liquidity shocks. Market observers warn that political instability and regulatory uncertainties could increase market volatility.

It is emphasized that cryptocurrency markets will become more stable when the number and effectiveness of liquidity providers increases, but limited participation can lead to large fluctuations.

In addition, it is thought that the fact that market players are managed by only a limited number of people may make them vulnerable to market manipulations in case of potential crises.

Such market shocks once again show how fragile cryptocurrency trading and liquidity is, even in countries such as South Korea where cryptocurrency markets are highly developed.