Bitcoin’s Surge and the Absence of the Kimchi Premium in South Korea
Bitcoin has experienced a significant increase in value, doubling since the beginning of the year. However, what is interesting is that South Korea’s famous “Kimchi premium” is not present during this bullish period. Unlike previous bull markets, BTC prices in South Korea are actually trading at a discount compared to other parts of the world.
The Unprecedented ‘Kimchi Discount’ in South Korea
Despite being the 5th largest Bitcoin trading pair globally, South Korea is currently witnessing a unique situation. While Bitcoin’s value has been rising, prices on South Korea’s top crypto exchanges, Upbit and Bithumb, are slightly lower. This is a departure from previous years when the “Kimchi premium” would push BTC’s value several hundred dollars above the global average during crypto bull runs.
Thriving Bitcoin Trading in South Korea
Bitcoin trading is thriving in South Korea, with BTC accounting for 3.73% of all global trades in the country. However, despite a global trading price of $34,059, BTC is exchanging hands at $33,902 on Upbit and approximately $33,869 on Bithumb. This translates to discounts of $157 and roughly $190 per unit on Upbit and Bithumb respectively.
Unique Impact on Bitcoin’s Value
In contrast to previous situations where various cryptocurrencies experienced price elevations along with BTC during the “Kimchi premium,” the current discounts are only affecting bitcoin’s value. Ethereum, for example, has a minor discount discrepancy of around $10-15 per unit.
Dominance of Upbit in South Korean Crypto Trading
Among Bithumb, Coinone, and Korbit, Upbit dominates the crypto trading volume in South Korea, accounting for nearly 80% of the country’s trades. Bithumb recorded approximately $408 million in global trades on Friday, while Upbit saw a much higher volume of $1.7 billion.
Opportunity for Arbitrage
The South Korean government and regulators have previously attempted to curb the “Kimchi premium,” but currently, there is no sign of a premium. However, the “Kimchi discount” presents an opportunity for arbitrage.
Hot Take: The Absence of the Kimchi Premium Highlights Changing Dynamics
The absence of the Kimchi premium in South Korea during Bitcoin’s surge indicates changing dynamics in the market. This deviation from previous bull markets suggests that factors influencing cryptocurrency prices are evolving. While the Kimchi discount may provide arbitrage opportunities for traders, it also reflects the growing global nature of cryptocurrency trading and its impact on localized premiums or discounts. As Bitcoin continues to gain mainstream attention and adoption, understanding these shifts becomes crucial for investors and traders.
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