Bitcoin’s “Kimchi Premium” in South Korea surges to highest level in 27 months
Bitcoin’s “Kimchi Premium” in South Korea reached a 27-month high, indicating a renewed interest from local investors. The increase in the premium aligns with Bitcoin’s overall price rise and is attributed to the absence of Bitcoin ETFs in South Korea. The country is currently considering legalizing Bitcoin Spot ETFs, which could have a significant impact on the market.
On Wednesday, South Korea’s Kimchi Premium for Bitcoin reached 10.32%, the highest in 27 months. After a brief dip to $60,000, Bitcoin bounced back and rose 4% in the last 24 hours, surpassing $66,800.
Notably, Sam Bankman-Fried, the bankrupt FTX CEO, claimed to have made up to a million dollars a day by leveraging this premium.
CryptoQuant CEO Ki Young Ju recently shared that Bitcoin’s price premium in South Korea has surged to an impressive 10%, reaching its highest point in two years. This indicates the comeback of Korean retail investors in the crypto market, showing renewed interest and confidence among local traders.
The Kimchi Premium represents the interesting price difference between cryptocurrency assets on South Korean exchanges and their international counterparts. This premium has been steadily increasing since the beginning of February, following the upward trend of BTC’s overall value.
Let’s take a closer look at the numbers. The Korea Premium index jumped from 5.19 on February 28 to an impressive 6.84 on March 5. This perfectly aligns with Bitcoin’s record-breaking surge to over $69,200 on the same day, fueled by ongoing investments in Bitcoin ETFs in the United States.
During the 2021 bull run, the Kimchi Premium reached its peak at 21.56% on May 19, coinciding with Bitcoin’s price exceeding $36,000 before eventually reaching its previous all-time high in November 2021.
However, strict capital controls in Korea make it difficult for foreigners to take advantage of the premium. An interesting example is Sam Bankman-Fried, the founder of the now-bankrupt Alameda Research and FTX exchange, who claimed that the premium reached as high as 50% during 2019 and 2020, allowing his firm to generate up to a million dollars a day.
Looking ahead, South Korea’s crypto future holds potential changes. While the United States experiences a surge in Bitcoin ETFs, South Korea currently relies on retail spot buying as the main driver of local prices. The governor of the Financial Supervisory Service, Lee Bok-hyun, hints at discussions regarding the legalization of Bitcoin Spot ETFs in the country. The outcome of these talks could reshape the landscape, potentially bringing in a new era of institutional participation in South Korea’s crypto market.