Bitcoin has experienced a significant surge in the past week, climbing from around $62,000 to over $81,000. This recovery in BTC price has pushed the “Kimchi premium,” a key indicator of the cryptocurrency market in South Korea, back into positive territory.
This development, which indicates a strengthening appetite for risky assets among South Korean retail investors, is also considered a noteworthy signal for Bitcoin.
According to Bloomberg, as of September 1, the price of Bitcoin in Korean won on Upbit, South Korea’s largest cryptocurrency exchange, was trading approximately 1% higher than the dollar-based price of Bitcoin on Binance. In other words, Bitcoin is trading at about 1% higher in the South Korean market compared to global markets.
Bloomberg reported that Bitcoin prices in South Korea traded at a premium compared to global markets for about a week, the longest period of appreciation seen since early May.
What Does “Kimchi Primi” Mean?
“Kimchi premium” refers to the difference between the price of Bitcoin traded in South Korea and its price on global markets. During periods of increased demand for cryptocurrencies among South Korean investors, local prices can exceed global market prices.
Therefore, the kimchi premium is considered one of the indicators used to track not only price differential but also the risk appetite of individual investors in South Korea and, more broadly, in Asia.
Analyst Says South Korean Investors Are Making Aggressive Buys During Risky Times!
Rachael Lucas, an analyst at BTC Markets, told Bloomberg that South Korean individual investors tend to aggressively increase their Bitcoin purchases during periods of increased risk appetite.
Lucas said that the shift in South Korea from trading at a discount to trading at a premium compared to overseas exchanges resulted in stronger returns in the following weeks.
Experts Wary of Kimchi Priming!
While the resurgence of the Kimchi Premium in South Korea is interpreted as positive for BTC, it is not seen as a guarantee of a new Bitcoin rally on its own.
Speaking to Bloomberg, Markus Thielen, head of 10x Research, noted that while the premium has turned positive, spot trading volumes haven’t increased to the same extent. Thielen believes it’s too early to say that South Korean investors have yet become the main driver of the Bitcoin price recovery.
*This is not investment advice.
