As a researcher with a background in cryptocurrency markets and economics, I find the decline in the Bitcoin Kimchi Premium in South Korea intriguing. This phenomenon, unique to South Korea, offers traders both opportunities and risks due to the country’s strict regulations. The recent shrinkage of 1.54% in Asia is a noteworthy development, as it may indicate a shift in market dynamics.
As a researcher studying the cryptocurrency market trends, I’ve observed that within the past month, the Bitcoin (BTC) price difference, also referred to as the “Kimchi Premium,” has been gradually decreasing in South Korea. Based on data from CryptoQuant, this premium shrank by approximately 1.54% last Friday. It is essential to note that the CryptoQuant metric calculates this figure by comparing the Bitcoin price in the US market and the price in South Korea.
Bitcoin Kimchi Premium Helps in Exploring South Korean
Coinspeaker described the Kimchi Premium as a unique occurrence in the cryptocurrency sector, specific to South Korea. This situation presents intriguing yet risky trading possibilities due to the country’s strict regulations. It represents the price gap between Bitcoin and other digital currencies when bought on local and international exchanges.
As an analyst, I would explain that I’ve identified the Kimchi Premium as a phenomenon primarily driven by a few key factors. South Korea’s favorable trade regulations played a significant role in creating this price difference between local and international Bitcoin markets. Additionally, the population’s readiness to engage with Bitcoin trading further fueled its growth. Moreover, stringent financial controls within the country added another layer of complexity to Bitcoin transactions, increasing demand for arbitrage opportunities. The emergence of cryptocurrency arbitrage trading has consequently amplified the popularity of the Kimchi Premium.
Traders are currently profiting from the price disparity by purchasing Bitcoin on international exchanges and then reselling it on South Korean platforms, resulting in substantial gains. The price discrepancy in Bitcoin trading between these markets can reach up to 3% to 20%.
In general, the South Korean market presents a challenge for foreign investors due to its restrictive nature. Likewise, local investors engaging in large-scale cryptocurrency arbitrage using foreign exchanges may face penalties under South Korea’s Foreign Exchange Transactions Act. Given the limited domestic supply of crypto in South Korea, there is often significant unmet demand in this market.
In March, there was a significant increase of 11.44% in the Kimchi Premium, which occurred approximately when Bitcoin reached a new record high price of over $73,000.
BTC Market Outlook Impacted by Lack of Enthusiasm
The decrease in the Bitcoin premium on the Korean markets is occurring concurrently with a significant drop in trading activity on the leading South Korean cryptocurrency exchanges. Affected platforms include Upbit, Bithumb, Coinone, Korbit, and Gopax, which collectively account for a substantial portion of the local crypto market’s transactions. In the last 24 hours, these exchanges reported a combined trading volume of approximately $2 billion.
I’m an analyst and I regret to report that the reported figure of $18 billion on March 6 is significantly different from the current situation. This discrepancy indicates a noticeable decline in investor sentiment towards the local market, which can be attributed to recent unfavorable events in the Middle East and the lackluster performance of US-listed Bitcoin ETFs over the past few weeks. The ongoing crisis in the Middle East continues to pose a significant challenge for businesses in the region and acts as a bearish catalyst. Furthermore, the subdued outlook surrounding US Bitcoin ETFs has further dampened market enthusiasm.
On May 8th, several Bitcoin Exchange-Traded Funds (ETFs) such as BlackRock’s iShares Bitcoin ETF (IBIT) and Fidelity’s Wise Origin Bitcoin Index Fund (FBTC), did not experience any new investments or withdrawals. In contrast, Bitwise Asset Management’s Bitwise Bitcoin ETF Trust (BITB) attracted approximately $12 million in new investments.
In summary, Bitcoin’s value has decreased due to fewer significant events in recent periods. Nevertheless, its current price stands at $63,015.97, representing a 3.57% rise over the past day.
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2024-05-10 16:07