South Korean financial regulatory bodies indicated, per widespread reports on Feb. 20, 2018, that it would support "normal" cryptocurrency trading, backpedaling from its threats just a month prior to crack down on cryptocurrency trading trading. The bitcoin world's collective sigh of relief at South Korea's recent announcement may have cause the uptick in Bitcoin's price in recent days, just as the precipitous January 2018 downturn was thought to have been partly brought on by the previous anti-Bitcoin statements by the South Korean government. (See more: Bitcoin Price Crashes On Fear Of South Korea Cryptocurrency Ban.)
Of course, digital currency prices are notoriously volatile, and these rises and recent falls could be attributable to many different things. Nonetheless, it does seem that South Korea plays an outsized role in the fluctuations of cryptocurrency prices.
South Korea is the third-largest market for bitcoin trades in the world, coming in behind Japan and the United States, according to a report by BBC. The small country is home to more than a dozen digital currency exchanges, and the demand there is so high that digital currencies sometimes trade at a premium of as much as 30% above prices in other countries. These facts all point to the dramatic increase in interest in digital currency investment in South Korea in recent years.
In response to the flurry of activity, the South Korean government has gone so far as to label the trend "irrational." Recently, the government has begun to step in, threatening to ban all cryptocurrency and moving to shut down some exchanges.
Economic and IT-Related Links
South Korea's deep ties to cryptocurrency are strengthened by the strong IT infrastructure across the country, allowing 14-fold increases in the number of cryptocurrency app users in just three months. At the same time, a slowing economy and rising rates of unemployment in recent years have fueled new interest in making money in innovative ways. For many South Koreans, one of those ways has been cryptocurrency investing.
Considering how closely involved many South Korean investors are in the cryptocurrency space, it's no surprise that the broader world takes notice when the government threatens drastic measures. A loss of South Korean investment would necessarily have a major impact on bitcoin prices as well as those of virtually every other digital currency.
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