Bitcoin Trades Below Global Prices In South Korea, Erasing Long-Standing ‘Kimchi Premium’ – Here’s Why
2024年10月18日 - 11:00AM
NEWSBTC
Bitcoin (BTC) is trading slightly lower in South Korea compared to
the global cryptocurrency markets due to a reverse ‘kimchi
premium,’ not seen since October 2023. Reverse ‘Kimchi Premium’
Makes Bitcoin Cheaper In South Korea According to a report by The
Korea Times, there is a price differential of more than $500
between Bitcoin’s price in South Korea and global markets. Analysts
attribute this to a negative ‘kimchi premium.’ Related Reading:
Analyst Warns Of Bitcoin Market Shift: Are We Near A Major
Sell-Off? For the uninitiated, kimchi premium refers to the price
difference where BTC trades at a higher price on South Korean
exchanges than on global markets. This premium is driven by local
demand, regulatory factors, and capital controls in South Korea,
leading to occasional price discrepancies. Currently, the kimchi
premium stands at -0.74%, leading to a lower market price for BTC
on South Korean exchanges than the rest of the world. Notably, the
kimchi premium has been negative since October 15. A positive
premium indicates strong demand for the underlying digital asset.
In contrast, a negative premium might suggest that investors may be
looking to trade on foreign exchanges due to South Korea’s
stringent regulations surrounding digital assets. A positive Kimchi
Premium is common on South Korean exchanges, which often experience
high trading volumes. When BTC briefly crossed $72,000 in March
2024, the kimchi premium surged as high as 10%. The report suggests
low domestic investor sentiment is a key factor behind the negative
premium. While global crypto trading volumes have surged due
to the upcoming US presidential elections and a Chinese stimulus
package, sentiment in South Korea remains lukewarm. KP Jang, head
of Xangle Research, commented: Korea prohibits foreign and
institutional investors from using domestic exchanges, which makes
the decline in retail investor demand a more direct factor.
Further, the preference for typically riskier altcoins in hopes of
extraordinary profits might influence the local South Korean crypto
market, driving attention away from BTC and leading to lower
trading volumes. That said, analysts expect the negative kimchi
premium to be a temporary phenomenon. Jang explained that,
historically, such price discrepancies have only persisted for a
short period. Will A Regulatory Overhaul Help South Korea? The
crypto regulatory framework in the peninsular country is witnessing
several changes to streamline digital asset trading and ensure
sufficient customer protection mechanisms are in place. Related
Reading: South Korean Authorities Investigate Lawmaker Over Alleged
Crypto Transfers In 2022, South Korea elected pro-crypto Yoon
Suk-Yeol as president. As part of his election campaign, Yoon
promised to reduce government interference in crypto markets,
calling existing regulations “far from reality and absurd.” In
contrast, neighboring Japan has openly embraced digital assets amid
evolving crypto regulations. For instance, earlier this year,
Japan’s Government Investment Pension Fund (GIPF), with $1.5
trillion in assets, expressed a desire to gain exposure to
BTC. BTC trades at $67,559 at press time, down 0.4% in the
past 24 hours. When writing, the leading cryptocurrency commands a
total market cap of $1.33 trillion. Featured image from Unsplash,
Chart from Tradingview.com
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