Cryptocurrencies traded at big discounts in the South Korean market Tuesday but recovered amid intense political drama in the East Asian nation.
What happened: Major coins like Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) sharply fell in value on Upbit, South Korea's largest cryptocurrency exchange.
Bitcoin plunged as low as $71,800 after President Yoon Suk Yeol imposed martial law in the country, even though it traded around 95,500 on Coinbase, the largest digital assets exchange in the U.S.
Similarly, Ethereum dropped to $2,700 on Upbit while trading over $3,600 on Coinbase.
The Korea Premium Index, which measures the percentage difference between the market prices of Korean exchanges and other exchanges, plummeted to -14.67, according to on-chain analytics firm CryptoQuant, indicating that retail investors were selling at a lower price than the average market price.
See Also: CleanSpark CEO Zach Bradford Explains Why The Company Is Betting on Bitcoin Mining, Not Buying
However, what should have been a profitable arbitrage opportunity did not last long, as Bitcoin returned to $95,424 on South Korean exchange Upbit as of this writing, showing a narrow discount from the cryptocurrency’s global price of $95,857. Ethereum also recovered to $3,700.
The recovery followed President Yoon’s U-turn after he withdrew the martial law diktat after facing parliamentary opposition.
Why It Matters: Taking note of the developments, noted analyst and CryptoQuant CEO Ki Young Ju wondered why Bitcoin was selling off in times of political instability.
"Why did the people selling now even buy Bitcoin in the first place?' he asked.
These developments were opposite to the popular “Kimchi Premium” phenomenon, where prices of cryptocurrencies on Korean exchanges can trade at a premium of as much as 30% above their international counterparts.
Sam Bankman-Fried, the founder of Alameda Research and the now-defunct FTX exchange, famously exploited this difference, reportedly earning up to a million dollars daily in 2019 and 2020.
Price Action: At the time of writing, Bitcoin was trading at $95,897.38, down 0.29% in the last 24 hours, according to data from Benzinga Pro.
Image via Shutterstock
Read Next:
