On Tuesday, after South Korean President Yoon Suk-yeol announced martial law, the prices of digital currencies on South Korean cryptocurrency exchanges fluctuated wildly as the country faced a parliamentary political deadlock.
Most large digital asset prices fell on Tuesday, with Bitcoin, the bellwether of the crypto world, experiencing significant fluctuations. Since President Trump was elected, Bitcoin has seen record gains, although the token failed to reach the $100,000 milestone many expected. Altcoins like XRP have also surged in recent weeks but then retreated.
In comparison, the drop in digital asset prices on South Korean cryptocurrency exchanges was more significant, 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 cryptocurrency exchanges dropped to $71,814.99, while the average Bitcoin price on global exchanges was about $93,600. It is reported that a large amount of funds flowed into South Korean cryptocurrency exchanges for a buying spree at that time.
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 previously announced martial law, a move that stunned the nation, lawmakers, and investors, claiming it was to prevent the opposition from trying to paralyze his government amid political fractures.
Not just Bitcoin, earlier, the trading prices of altcoins on South Korean cryptocurrency exchanges were generally lower than those 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, priced 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 United States. "For example, in the past 24 hours, the total XRP trading volume on Kraken and Coinbase was about $2.76 billion," wrote analysts from the digital asset platform 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 than Bitcoin, leading to greater volatility, with Bitcoin primarily used as a store of value currency. While this volatility resulted in XRP reaching record highs not seen since the 2021 cryptocurrency bubble, it also means these tokens could suffer greater losses than Bitcoin in uncertain markets.
Article reposted from: Jinshi Data
