The current kimchi premium level could be a positive sign for the crypto market as it shows that there is plenty of room for a rebound.
South Korea’s Bitcoin kimchi premium has dropped significantly amid an overall downward trend in the broader market, suggesting a waning enthusiasm among digital asset investors in the country.
The Bitcoin KIMKII premium plummeted to as low as 1.5% during Asian trading hours Friday afternoon, according to data from CryptoQuant.
Bitcoin Kimchi Premium Plummets
For those who are not familiar with the concept, the Kimchi Premium refers to the difference between the price of Bitcoin on Korean exchanges and the price of Bitcoin on other cryptocurrency trading platforms around the world. The term also borrows the name "Kimchi", a traditional Korean food, to describe this unique price difference phenomenon.
It is precisely because of the capital control policies implemented in South Korea that the price of Bitcoin (BTC) on Korean exchanges differs from other trading platforms around the world. These policies restrict foreign investors from buying and selling on Korean trading platforms, while also preventing local investors from taking advantage of price differences for arbitrage trading. Due to these restrictions, the supply of cryptocurrency in South Korea is not as abundant as in the global market, and coupled with the high demand for cryptocurrency in South Korea, this has, to a certain extent, caused the high price of Bitcoin in the Korean market, the so-called kimchi premium.
The level of the Kimchi premium is often seen as an indicator of the strength of demand for Bitcoin in the Korean market. When the premium is high, it indicates strong demand for Bitcoin among Korean investors, which may indicate a bullish market; while when the premium is low or falling, it may reflect weakening demand or a shift in market sentiment. Therefore, the Kimchi premium is an important economic indicator that is closely watched by cryptocurrency market analysts and investors.
The decline in the Kimchi premium to 1.54% indicates a decline in interest in Bitcoin among South Korean investors, which is consistent with the decline in trading volumes on top local exchanges. This decrease in trading volume could be a reflection of overall market trends or dynamics specific to the South Korean market. According to CoinMarketCap data, a decrease in trading volume can be observed, which could be related to investor sentiment, market supply and demand conditions, or macroeconomic factors.
A positive sign?
The decline in the Bitcoin Kimchi premium, from a 27-month high of 10.32% in early March this year to the current 1.54%, is closely related to the volatility of Bitcoin prices and market sentiment. Looking back at recent trends, in mid-February, the price of Bitcoin was around $48,200, and by the first week of March, the index soared to a 27-month high of 10.32%, showing the strong demand for Bitcoin in the Korean market. In the following weeks, it rose to 11.44% as BTC hit a record high.
However, since Bitcoin fell from its all-time high and fell below $70,000, the pickle premium has started to decline steadily. Since April, the entire crypto market has experienced significant adjustments, and the price of Bitcoin has also fallen below $60,000, hitting a low of $56,700 before recovering.
While the decline in the kimchi premium may reflect a change in market sentiment and a reassessment of risk by investors, the current lower premium level may also indicate a positive shift in the market. A lower kimchi premium may indicate that the market has enough room for a price rebound and may provide conditions for a further recovery in Bitcoin. This suggests that despite a period of market correction, investors may still be optimistic about the long-term value and potential of Bitcoin. #泡菜溢价 #比特币
