After US President Donald Trump imposed new customs duties on Canada, Mexico and China, Bitcoin (BTC) and altcoins experienced sudden and sharp declines.
While BTC fell to $91,000 levels, the difference between the Bitcoin price on South Korean exchanges and the price on global exchanges, called the Kimchi premium, reached 10% in the Asian morning hours on Monday.
According to CryptoQuant data, the Bitcoin kimchi premium reached 9.7% on Monday morning in South Korea. This is the highest South Korean premium since April 14, 2024, when the kimchi premium rose above 13%.
This premium is due to the fact that the South Korean cryptocurrency market is closed to foreign investors. While local investors buy large amounts of BTC from foreign exchanges for arbitrage purposes and aim to profit from the price difference, it is difficult for them to pocket their actual profits due to South Korea’s strict capital controls.
Presto Research Analyst Min Jung said the following regarding this:
“The kimchi premium typically rises in bull markets when Korean investors bid higher, but can also rise during periods of panic selling.
This occurs when selling pressure is lower in Korean stock markets compared to global markets.
“If selling pressure continues among U.S. investors, the premium could remain high. However, historically, the Kimchi Premium has averaged around 5%. If the market stabilizes and recovers, we could see the premium narrow back to that level.”
Jung also noted that the kimchi premium could also rise when asset prices on overseas exchanges drop significantly, adding that a rising kimchi premium is not a positive sign for Bitcoin in the short term.
*This is not investment advice.
Source: https://en.bitcoinsistemi.com/bitcoins-korean-premium-reaches-10-month-peak-analyst-comments-on-the-situation-explains-its-impact-on-btc/