South Korea Bitcoin Kimchi Premium Surges: A Sign of Bullish or Panic Trading?
The premium for Bitcoin kimchi in South Korea reached a 10-month high as the price of Bitcoin in South Korean markets remained stable despite a wider sell-off in cryptocurrencies. At roughly two in the morning on Monday, the kimchi premium touched 9.7% for Bitcoin in South Korea, according to statistics from CryptoQuant. Since April 14, 2024, when the premium surpassed 13%, this is the highest South Korean premium. At the time of writing, it has since dropped to 8.24%.
The Kimchi Premium typically rises in bull markets when Korean investors bid higher, but it can also spike during periods of panic selling. This occurs when selling pressure is lower on Korean exchanges compared to global markets.
Presto Research Analyst Min Jung
What is Kimchi Premium?
When Bitcoin (or other cryptocurrencies) are trading at a larger proportion on South Korean exchanges than on other exchanges, this is referred to as the “kimchi premium.” This premium results from the South Korean cryptocurrency market being limited to foreign investors and capital controls laws may penalize local investors who purchase substantial quantities of cryptocurrency from overseas exchanges for arbitrage.
South Korea’s Altcoin Market Thrives Despite Growing Global Trade War Concerns
With a strong emphasis on altcoin trading, South Korea has one of the world’s busiest cryptocurrency exchanges despite relatively tougher local laws. However, investors are becoming increasingly concerned about a protracted trade war and its potential effects on U.S. inflation after U.S. President Donald Trump placed steep tariffs on imported products from China, Canada, and Mexico over the weekend. According to Coinglass data, the cryptocurrency market saw liquidations of more than $2.1 billion in the last day.
If selling pressure among US investors persists, the premium could remain elevated. However, historically, the Kimchi Premium has averaged around 5%. If the market stabilizes and rebounds, we would likely see the premium narrow back toward that level.
Jung
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