As a seasoned researcher who has witnessed the rise and fall of cryptocurrencies over the past decade, I find the current state of Bitcoin (BTC) trading in South Korea intriguing. The reverse ‘Kimchi Premium’ is indeed a rare sight, last seen in October 2023, and it’s fascinating to see how market dynamics can shift so dramatically.
In South Korea, Bitcoin (BTC) is experiencing a slight decrease in value compared to other international cryptocurrency markets, which can be attributed to a recent ‘kimchi reversal’ – a phenomenon not observed since October 2023.
Reverse ‘Kimchi Premium’ Makes Bitcoin Cheaper In South Korea
A study published by The Korea Times indicates that the cost of Bitcoin is over $500 higher in South Korea compared to international markets. Experts explain this discrepancy as being due to a ‘kimchi premium,’ which is essentially a term for an excessive price markup.
As a researcher delving into the intricacies of cryptocurrency trading, I’ve come across an interesting phenomenon known as the “Kimchi Premium.” This term refers to the noticeable gap between Bitcoin’s prices on South Korean exchanges versus those on international markets. This disparity is primarily influenced by local interest, regulatory factors, and financial restrictions within South Korea, resulting in occasional price inconsistencies.
At present, the price of Bitcoin (BTC) is lower on South Korean exchanges compared to international markets due to a -0.74% ‘kimchi premium’. It’s important to note that this negative kimchi premium has persisted since October 15.
As a researcher studying the digital asset market, I’ve observed that a positive premium on an asset signifies robust demand for it among investors. Conversely, a negative premium could potentially indicate that some investors might be seeking opportunities to trade these assets on foreign exchanges, possibly due to the strict regulations imposed by South Korea on digital assets.
On South Korean cryptocurrency markets, it’s not uncommon to see a Kimchi Premium, which is an increase in price due to heavy trading activity. For instance, when Bitcoin reached around $72,000 in March of 2024, the Kimchi Premium peaked at an impressive 10%.
The report indicates that a low level of domestic investor optimism significantly contributes to the unfavorable pricing difference. Despite a substantial increase in global cryptocurrency trading due to the upcoming U.S. elections and Chinese economic stimulus, investor enthusiasm in South Korea remains subdued. KP Jang, head of Xangle Research, remarked on this matter.
In simpler terms, it means that Korea doesn’t allow foreign or institutional investors to trade on local stock exchanges. Consequently, any drop in demand from retail (individual) investors becomes a more significant and direct cause.
As a market analyst, I observe that the inclination towards riskier altcoins, driven by the pursuit of substantial returns, could significantly impact the South Korean cryptocurrency market. This trend may potentially divert focus away from Bitcoin, resulting in decreased trading volumes for this digital currency.
In summary, experts predict that the current high prices for kimchi compared to its cost in other regions will be a brief occurrence. As Jang points out, similar price differences have tended to last just a short while in the past.
Will A Regulatory Overhaul Help South Korea?
In the country with a peninsula shape, the regulations governing cryptocurrencies are undergoing numerous adjustments to make digital asset trading more organized and establish adequate safeguards for customers’ security.
2022 saw the election of pro-cryptocurrency candidate Yoon Suk-Yeol as South Korea’s President. During his campaign, Yoon expressed a desire to decrease government involvement in cryptocurrency markets, labeling current regulations as “unrealistic” and “absurd.
Instead, let’s consider the following: In stark contrast, neighboring countries like Japan have warmly welcomed digital assets as they adapt their crypto regulations. For example, earlier this year, the Japanese Government Investment Pension Fund (GIPF), boasting a staggering $1.5 trillion in assets, publicly declared an interest in investing in Bitcoin.
At the moment of reporting, Bitcoin is trading for approximately $67,559, representing a 0.4% decrease over the last 24 hours. Currently, the dominant cryptocurrency holds a total market capitalization of about $1.33 trillion.
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2024-10-18 05:10