On Tuesday, after South Korean President Yoon Suk-yeol declared martial law, the prices of digital currencies on South Korean cryptocurrency exchanges fluctuated sharply as the country faced a parliamentary political deadlock.
Most large digital asset prices fell on Tuesday, with Bitcoin, the benchmark of the crypto market, experiencing significant fluctuations. Since President Trump won the U.S. election, Bitcoin has seen record gains, although the token has failed to reach the $100,000 milestone many expected. Altcoins like XRP also surged in recent weeks but then retraced.
In contrast, the price decline of digital assets on South Korean cryptocurrency exchanges was more pronounced, as traders are known to exploit the so-called 'kimchi premium' for long-term arbitrage. On Tuesday, the price of Bitcoin against the US dollar stablecoin Tether on South Korean exchanges briefly dropped to $71,814.99, while the average Bitcoin price on global exchanges was about $93,600 at that time. It was reported that large amounts of capital flowed into South Korean cryptocurrency exchanges for bargain hunting.
Note: The kimchi premium refers to the price difference of Bitcoin between major global exchanges and South Korean exchanges.
The so-called kimchi premium of Bitcoin
Yoon Suk-yeol later stated that he would lift the martial law order. He had earlier announced the martial law, which shocked the nation, legislators, and investors, claiming that it was to prevent the opposition from attempting to paralyze his government amid political fractures.
Not only Bitcoin, earlier, the trading prices of altcoins on South Korean cryptocurrency exchanges were generally lower than on other exchanges, with the famous Dogecoin (DOGE) once priced at about 34 cents on South Korean exchanges, while the average price on several major exchanges was 40 cents. XRP surged significantly in the past few days, trading at $2.44 on South Korean exchanges, while the average price on several major exchanges was $2.46.
FRNT Financial wrote in a report to clients that interest in XRP in South Korea is unusually high compared to the U.S. "For example, in the past 24 hours, the total XRP trading volume on Kraken and Coinbase was about $2.76 billion," analysts from the digital asset platform stated in a report on Tuesday. According to FRNT Financial, the trading volume of XRP on cryptocurrency exchanges available only to South Koreans reached $5.5 billion during the same period.
Altcoins like XRP often have worse liquidity compared to Bitcoin, leading to greater volatility, with Bitcoin primarily used as a store of value. Although this volatility has led to XRP achieving record gains not seen since the 2021 cryptocurrency bubble, it also means that in uncertain markets, these tokens may suffer greater losses than Bitcoin.
The article is reposted from: Jinshi Data
