South Korea’s so-called Kimchi Premium hit a 27-month high on Wednesday. The difference between the price of bitcoin in the Asian country and the rest of the world shot up to 10.32%.
Analysis company CryptoQuant keeps track of this data and the CEO of the company shares on X that something special is going on. South Koreans are aggressively buying up bitcoin, causing the price to be much higher than in the rest of the world.
#Bitcoin‘s price premium in Korea reaches 10%, a two-year high. Korean retail investors are getting back.https://t.co/2hsQyawe2i pic.twitter.com/iKXm25Un3T
— Ki Young Ju (@ki_young_ju) March 7, 2024
Crypto prices in South Korea differ from those outside the country due to a number of different unique elements of the country’s crypto market.
Local rules prevent foreign investors from trading on South Korean stock exchanges. Korean investors who buy large sums of cryptocurrencies on foreign exchanges for arbitrage could be punished under the country’s Foreign Exchange Transactions Act.
Arbitrage trading refers to the phenomenon of trading a coin for a price x in land xx buys it for price y in land yy to sell. The difference is then the profit for this arbitrage trader.
Because this is not allowed, South Korea is isolated from global trade. And this is also reflected in the price development of bitcoin. The demand is greater than the supply (which is available outside the country). The price therefore rises (compared to exchanges such as Coinbase and Kraken), creating the premium. This percentage is now at its highest point in more than two years.
Bitcoin broke its previous all-time high in the US on Tuesday, surpassing the $69,000 mark. On the South Korean Upbit exchange, bitcoin rose above 97 million Korean won ($72,926).
Bitcoin has since given back some of its gains and is currently trading around $67,200, after also trading below $62,000.
Source: https://bitcoinmagazine.nl/nieuws/kimchi-premium-in-zuid-korea-is-terug-koers-in-land-nu-10-hoger
