Bitcoin (BTC) demonstrated resilience in the face of recent market fluctuations, recovering from a brief dip to $60,000 at the beginning of the week and climbing back above the $65,000 mark. This recovery occurred in an environment where the interest and confidence in the cryptocurrency market in South Korea grew, especially as the Bitcoin Kimchi Premium reached a 10% level, the highest in the last two years.
Kimchi Premium Reaches Highest Level in Two Years
CryptoQuant’s CEO Ki Young Ju commented on the Kimchi Premium reaching its highest level in two years. Ju noted that the rise in the Kimchi Premium indicates that South Korean individual investors are becoming active in the cryptocurrency market again and that excitement among traders in the country is increasing. The Bitcoin Kimchi Premium, which represents the price difference between South Korean exchanges and those abroad, has been rising along with the price of BTC since the beginning of February.
Data from CryptoQuant shows that the Bitcoin Kimchi Premium rose from 5.19 on February 28 to 6.84 on March 5, coinciding with the period when Bitcoin reached an all-time high of over $69,200. The increase in the Kimchi Premium is attributed to ongoing investments in spot Bitcoin ETFs in the US, as South Korea still lacks spot Bitcoin ETFs and individual spot purchases on local exchanges are driving prices up.
Historically, South Korean exchanges have shown significant price differences compared to global exchanges during Bitcoin price surges. For example, in December 2017, Bitcoin traded at prices approximately 50% higher on South Korean exchanges, leading the leading crypto data and price platform CoinMarketCap to remove some South Korean exchanges from its global average due to the significant price gap.
Furthermore, during the 2021 bull run, the Kimchi Premium peaked at 21.56% on May 19, before Bitcoin’s price surpassed $36,000 ahead of reaching its all-time high in November 2021. Now, the Kimchi Premium is rising with the anticipation of the approval of spot Bitcoin ETFs in the US.
Spot ETFs Enter the National Agenda
On the other hand, South Korean officials are currently considering the legalization of spot ETFs in the country. However, there are still some regulatory concerns, particularly regarding the classification of BTC as an underlying asset.
In January, financial authorities stated they had no immediate plans to regulate spot Bitcoin ETFs, while the sale of spot Bitcoin ETFs by brokerage firms raised questions under the Capital Markets Law.
