2023-12-11 12:28:33
Investor sentiment overheats as it surpasses $44,700
Domestic exchanges are 3 million won more expensive
During downturns, the premium may disappear.
▲ On the 4th, when Bitcoin exceeded 55 million won in 20 months, the virtual currency price is displayed on the electronic display board of the Bithumb Customer Support Center in Seocho-gu, Seoul. Seoul Newspaper DB Recently, domestic investors’ interest in virtual assets (cryptocurrency) is rising once more. Meanwhile, as the transaction volume of Koreans betting on Bitcoin is increasing, Bitcoin is being traded at a much higher price on domestic exchanges than in foreign countries. This is due to the so-called ‘Kimchi Premium’ (Korean Premium), which proves that domestic investors’ investment sentiment is overheated.
According to the virtual asset industry on the 11th, on the 8th (local time), the price of Bitcoin on Binance, the world’s largest coin exchange, once rose to $44,700 (regarding 58.86 million won), hitting the highest level in regarding 20 months. On the same day, Bitcoin was traded at more than 60 million won on Upbit, Korea’s largest virtual asset exchange. Due to high demand, domestic exchanges tend to be more expensive than foreign exchanges, and such transactions are referred to as kimchi premiums.
Because Bitcoin is affected by transaction standards, exchange rates, demand, etc., price differences occur by country. When the lira, Turkiye’s fiat currency, plummeted in 2021, the market invested in Bitcoin. As demand soared, Bitcoin was traded at around $64,000 in Turkye at the time, 12.3% higher than the global trading price ($57,000).
The price of Bitcoin, which has risen significantly over the past week, has entered a correction phase, but the Korean premium appears to be growing. On global exchanges, it fell nearly 5% compared to the previous day and was traded at the 55 million won range, while on Upbit, the decline was only regarding 3% and traded at the 58 million won range. Bitcoin traded in won in Korea is regarding 3 million won more expensive, and the kimchi premium has increased by nearly 5%. The kimchi premium rose as expectations spread that the price of Bitcoin would rise.
At the end of 2017, when Bitcoin popularity soared, the kimchi premium exceeded 20%. Recently, some domestic funds that cannot find suitable investments appear to be flocking to the cryptocurrency market. Citing data from Sisi Data, a virtual asset data provider, Bloomberg News reported on the 5th (local time) that among fiat currencies traded in Bitcoin last month, the won accounted for 42.8%, surpassing the dollar for the first time. However, during a cryptocurrency decline, the additional premium often disappears along with it, so caution is needed. In fact, the kimchi premium, which was close to 20% when Bitcoin sank below $50,000 in April 2021, later recorded in the 0% range.
Demand from domestic investors is growing due to expectations that the Bitcoin price will exceed $10,000 next year, but it is also necessary to take into account the possibility that the spot exchange-traded fund (ETF) will not be approved, which is the biggest cause of the rise. Laurent Ksis, a virtual asset advisor at CEC Capital, said, “If a Bitcoin spot ETF is not launched, we will face a downward movement.” “There is,” he predicted.
Reporter Min Na-ri
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