The “kimchi premium” has also flipped to a discount, and that may say something about the mood of the crypto market, at least in South Korea.
South Korea’s “kimchi premium” has also flipped to a discount, meaning cryptocurrencies like bitcoin are now cheaper to buy on South Korean exchanges.
The phenomenon is named after the Korean dish kimchi. The kimchi premium signifies when the price of bitcoin
BTC called BTC
The trees are down
Cash $27,312
South Korean exchanges trade more than other markets.
The Korea Premium Index moved between -0.24 and 0.01 range between February 17 and 19, according to data from blockchain analysis provider CryptoQuant.
At the time of writing, CoinMarketCap shows that BTC is trading at $24,464 on Coinbase and $24,487 on Binance.
In comparison, Korean exchange Bithumb listed it at $24,386, while Upbit, one of South Korea’s largest exchanges, traded bitcoin at $24,405.
The same is true for Ether, the second largest crypto by market cap
ETH
The trees are down
Cash $1,811
At the time of writing, CoinMarketCap data shows that ETH is trading at $1,687 on Coinbase and $1,691 on Binance — but ETH was changing hands for $1,682 on Bithumb and $1,683 on Upbit.
According to Du Wan Nam, chief operating officer of node validator and venture capital fund StableNode, the switch to kimchi premium discounts has reduced interest from Korean retail investors.
He said, “Usually this means reduced interest in crypto from Korean retailers, which ironically is just a good time to buy because you know you can always sell yours to Korean gamblers at a 20% premium when they are FO It’s ‘MO’.”
Some traders try to make a profit by trading price differences between different exchanges, a process called arbitrage.
Related: Korean regulators investigate over $6.5 billion in banks linked to kimchi premiums
In the past, the size of the kimchi premium has been linked to the news, with significant dips sometimes recorded when there was bad news about the South Korean crypto exchange.
The premium disappeared in early 2018 when the South Korean government announced plans to crack down on cryptocurrency trading.
Kimchi Premium first appeared in 2016, according to a 2019 University of Calgary research paper.
Between January 2016 and February 2018, South Korean bitcoin exchanges charged an average of 4.73% more than their US counterparts, the researchers said.
