Experts yesterday were reported to have an optimistic view after South Korea didn’t completely ban Bitcoin in the country. However, South Korean Finance Minister Kim Dong-yeon clarified Tuesday in an interview that it is still “a live option” for the country to totally ban digital currencies. It is worth mentioning though that no final decision has been made by the South Korean president yet.
In effect, Bitcoin that was trading at $13,209.25 from the day before as of 7:13 am GMT, dropped significantly by more than 12% in just one day. As of writing this, Bitcoin is at $11,993.
And it isn’t just Bitcoin that is experiencing a plunge. Ripple, the third largest cryptocurrency based on market capitalization has dropped by as much as 25%. Also, you have Ethereum that also experienced the same trend and dropped by 18% since the previous day. And as for Dash, its price plunged by 22% trading only at $773.28 as of writing this piece.
Though volatility is common in cryptocurrencies, you can consider the recent plunge to be extreme even in this market.
Is This the End for Bitcoin in South Korea?
The remarks of South Korean officials have affected the global markets for Bitcoin as well as other cryptocurrencies in the past weeks, especially given the high demand on cryptocurrencies from South Korean investors. In fact, South Korean investors created what is known as a “kimchi premium” which is an extra price that South Korean investors pay in order to purchase cryptocurrencies.
It is important to clarify that the government mentioned that the plans are only suggestions as of the moment and it needs more talks in order to be finalized. However, another government minister mentioned that trading could be banned last week. These plans have alarmed individuals that have invested in cryptocurrencies. Around 200,000 people have already submitted their petition to the government asking to keep Bitcoin trading legal in South Korea.
How Big Is Bitcoin in South Korea?
So many Koreans have already embraced cryptocurrencies that prime minister has already issued a warning, especially to the nation’s youth. In fact, in South Korea, “kimchi premium” is about 16% over the prevailing international rates. Also, there are instances wherein 21% of the world’s total Bitcoin trades actually came from South Korea according to Coinmarketcap.com.
Ban Is Not Far from Happening
So is a ban happening anytime soon? This isn’t exactly far from possibility. In September, Korea’s top financial watchdogs have expressed “grave concerns” about speculations involved in digital currencies.
According to Thomas Glucksmann, a Hong Kong-based head of marketing at cryptocurrency exchange Gatecoin Ltd., “given the size of the market, there’s a greater need for them to come up with something soon”.
Until now, there is no actual explanation why Bitcoin has become so popular in Korea. However, local analysts have pointed towards the possibility of geopolitics and cultural factors to be the reason for Bitcoin’s popularity. The country also shares a border with Kim Jong Un. Many experts believe that there are individuals who are safekeeping their assets on cryptocurrencies in case conflict arises.