Bitcoin Kimchi Premium in South Korea Soars to 2-Year High, Is That Bad News for BTC?

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South Korea’s Bitcoin kimchi premium has soared to levels last in 2021 amid Bitcoin’s latest rally that resulted in a new all-time high.

Data from CryptoQuant shows that the premium index reached a 27-month high of 10.32% on March 6, indicating surging demand and growing interest in BTC among local investors in the South Korean crypto market.

Kimchi Premium Reaches 10.32%

The kimchi premium, also the name of a traditional South Korean side dish, is an index that reveals the difference in Bitcoin’s valuation on local and global crypto exchanges. As South Korea is one of the biggest players in the digital asset market, the index is an important indicator for monitoring changes in the crypto landscape.

Usually, the prices of cryptocurrencies on South Korean exchanges differ from those on foreign platforms, mainly due to strict capital control policies from regulators. Foreign investors, including institutional entities, are prohibited from trading on South Korean exchanges, and local traders will be punished for engaging in arbitrage trades. The limited supply of crypto in the country mostly leads to wide price gaps due to heavy demand.

A high premium indicates bullish sentiment on local exchanges compared to international platforms, while a lower figure signals a bearish sentiment and declining buying pressure.

The premium is also considered an indicator of retail fear of missing out (FOMO). This is evident in the price of BTC surging past 97 million won ($72,926) on the Upbit exchange when the crypto asset briefly touched its all-time high of $69,000 in the United States on Tuesday.

A Potential Price Correction

It is worth mentioning that BTC could experience a price correction following an eventual decline in the kimchi premium. Historical data shows that Bitcoin’s price has plummeted on most occasions after a peak in the index. However, it remains to be seen when such an incident would occur.

Meanwhile, the premium spike comes as the South Korean government reevaluates its stance on spot Bitcoin exchange-traded funds (ETFs). Early last month, Financial Supervisory Service chief Lee Bok-Hyun announced a visit to the U.S. Securities and Exchange Commission later this year to discuss Korea discount measures like spot Bitcoin ETFs with SEC chair Gary Gensler. Discussions about the products have also taken center stage in the country’s election campaign.

The post Bitcoin Kimchi Premium in South Korea Soars to 2-Year High, Is That Bad News for BTC? appeared first on CryptoPotato.

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