Bitcoin’s “kimchi premium” was down Thursday as the cryptocurrency lost steam against the Korean won (KRW).
The crypto premium is the difference between prices on South Korea’s digital currency exchanges and the going rate on other global trading exchanges.
The drop of the kimchi premium — a popular bitcoin market indicator — was the result of soaring demand in Korea in tandem with the difficulty of trading into and out of the region.
Bitcoin’s price has retreated to $57,370, falling 2.6% in the last 24 hours. It is now dropping marginally away from the $60,000 level that it has had difficulty maintaining.
Losing steam
Historically, surges in the Korean kimchi premium have drained the momentum out of the bull rallies, data posted in a Twitter post by Arcane Research analyst Vetle Lunde show.
Lately, the Korean premium has soared to 18%, the highest since February 2018, figures by CryptoQuant show.
The price divide narrowed to 15% during the European trading sessions, as bitcoin weakened by more than 6% to KRW 70,412,000 on the Upbit crypto exchange, the biggest in South Korea in terms of trading volumes, data source CoinGecko says.
Dissecting the kimchi
“It seems someone finally figured out how to arbitrage this Kimchi premium opportunity. The trading volume in the 30-minute timeframe on Upbi… was larger than Binance’s,” Decrypt quoted data provider CryptoQuant CEO Ki Young Ju as saying.
Bitcoin was down more than 50% in 30 days after the kimchi premium climbed on Jan. 8, 2018, and kept its spot in a bear market until the end of the year.
Bitcoin was hounded by notable price dips after peak premiums were noted in mid-November of the same year and at the end of January 2019.
According to analysts, a potential dump in South Korea may not significantly affect bitcoin’s worldwide average because the country now contributes less than 2% of the global trading volume against 8% in 2017.
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Source: https://bitcoinerx.com/bitcoin/bitcoin-price-weakens-as-kimchi-premium-loses-steam/
