Bitcoin's 'Kimchi Premium' shrinks as South Korea's crypto enthusiasm weakens

The premium, which refers to the price percentage gap between bitcoin (or other cryptocurrencies) in South Korea and elsewhere, has been in a steady decline since mid-April. CryptoQuant’s data compares the bitcoin price in South Korea with that of the U.S. market.

The Kimchi Premium stems from South Korea’s crypto market being closed off to foreign investors, while local investors who buy large amounts of crypto from foreign exchanges for arbitrage may be punished under the country’s Foreign Exchange Transactions Act. 

As South Korea has a limited local supply of crypto, a surge in demand often leads to a wider gap. In March, the premium reached a high of 11.44% after bitcoin renewed its all-time high at the time.

The sunken bitcoin premium coincides with reduced trade volumes in South Korea’s top five crypto exchanges — Upbit, Bithumb, Coinone, Korbit and Gopax — which dominate the local market. The five exchanges saw a combined trading volume of $2 billion in the past 24 hours, according to CoinGecko data , while the figure reportedly stood at nearly $18 billion on March 6.

South Korea’s enthusiasm for crypto earlier this year may have been dampened by multiple events, including the conflict in the Middle East and continued net outflows in U.S. spot bitcoin exchange-traded funds. There has also been a lack of events that highlighted bitcoin’s value since the halving occurred last month. 

Bitcoin was trading at around $63,018 at the time of publication, up 2.9% over the past 24 hours, according to The Block’s price page .