The “Kimchi Premium” is back. As the price of Bitcoin soars, the digital asset is more expensive in one place in particular: South Korea.
Named after a popular dish in the Asian country, the “Kimchi Premium” refers to higher prices for Bitcoin—and other cryptocurrencies—on Korean exchanges. And yesterday, the premium marked its highest in two years, data firm CryptoQuant told Decrypt.
“The premium on Bitcoin’s price in [South] Korea has hit a 10% increase, marking its highest in two years,” the firm said, adding that the return of Kimchi is bullish because it means “a resurgence of Korean retail investors.”
The reason for the phenomenon is largely down to the country’s strict capital controls: it’s hard to move money in and out of South Korea. As a result, the Bitcoin/Korean won trading pair is more common in South Korea compared to the Bitcoin/U.S. dollar pair in other places.
Foreign investors cannot use South Korean exchanges, meaning that if there is a surge in demand at home, the price will naturally rise.
And South Korean traders wanting to take advantage of the difference can’t; not easily, anyway. The tight capital controls mean that arbitraging the difference—that is, buying Bitcoin in the States and then selling it in South Korea to pocket the difference—is difficult.
Bitcoin at one point was priced as high as $72,451 in Korea. It briefly broke past its November 2021 all-time high on Tuesday on America’s biggest crypto exchange, Coinbase, when it touched $69,324—before crashing down again.
It’s currently priced at $67,268, having shot up by nearly 57% in 30 days, according to CoinGecko.
Edited by Andrew Hayward
Disclaimer
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
Stay on top of crypto news, get daily updates in your inbox.
Source: https://decrypt.co/220599/bitcoin-kimchi-premium-back-price-spikes-south-korea
