Rising Kimchi Premium Returns To Bitcoin Trading - Signal of the Top?

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Just as in 2017-2018, the cost of trading Bitcoin in South-Korea rose in comparison to trading Bitcoin in Europe or the US. So much so, that analysts see a resurgence of the so-called Kimchi Premium, or the price that South Korean crypto enthusiasts need to pay for Bitcoin.

In Seoul, you pay on average some 11% more than you do in New York or Frankfurt apparently. Is this the sign of a top?

Tokyo premium

Sam Bankman-Fried, owner and CEO of FTX trading, made his first millions thanks to the existence of Kimchi Premium in fact.

Back in 2018, much of the cryptosphere was distracted by the 30 percent price gap between South Korean and American Bitcoin, known in the annals of crypto as the Kimchi Premium.

Due to regulation, you couldn’t profit from it though. Bankman-Fried found a loophole and was able to trade the 10% premium on the Tokyo crypto exchanges and sell it for a guaranteed profit over in the US.

Kimchi premium now more than 16% and widening. On Bithumb, BTC is effectively trading at $66,300 pic.twitter.com/vUSoshBtFx

— Larry Cermak (@lawmaster) April 5, 2021

Only problem was that you had to buy it in-person in Tokyo to sell it in San Francisco afterwards, which means the man crossed the Pacific by plane more times than most business people have done in their lifetime.

By now, as the Kimchi Premium is back up to 11%, analysts are wondering whether this counts as the sign of a possible top.

Ki Young Ju, the CEO of CryptoQuant, admitted that the rising difference could pose a problem in the future, whilst at the same time pointing out the difference between then and now.

He stated:

Bitcoin fundamentals still look good, but the Korean bubble is worrisome to me. Shitcoins prices are skyrocketing, and Korean crypto trading volume has surpassed the national stock exchange (KOSPI).

However, he also noted that the big difference this time round is that South Korean crypto trading is only a small part of the market (back in 2017-2018, about 30% of young South-Koreans were invested in crypto, whereas now they’ve been joined by many of their worldwide peers).

Mr Young Ju added that:

Even if the bubble collapses, the impact is unlikely to be significant since it’s just 1.7%