“Kimchi Premium” Returns: Bitcoin Trades at 10% Price Premium in South Korea Against Global Exchanges
Bitcoin’s infamous “Kimchi premium” has made a comeback, with the cryptocurrency commanding an average 10% price premium in South Korea compared to global exchanges.
As of the Asian morning hours, Bitcoin (BTC) was trading just above $66,000 on most global exchanges, while on Korean exchanges like Upbit , it reached over 93 million won, equivalent to over $71,000 at current exchange rates.
The Kimchi premium phenomenon refers to the price difference of Bitcoin on local Korean exchanges compared to global platforms.
In theory, traders can exploit this arbitrage opportunity by purchasing Bitcoin on a global exchange, transferring it to a Korean exchange, and selling it for a risk-free 10% profit in Korean won.
However, capital controls and challenges in withdrawing large sums of money from Korea make it difficult for most investors to take advantage of this opportunity.
One notable figure who capitalized on the Kimchi premium was Sam Bankman-Fried, the founder of Alameda Research and FTX exchange.
Bankman-Fried claimed that the premium reached as high as 50% during 2019 and 2020, enabling his firm to make significant profits.
The return of the Kimchi premium indicates renewed interest and participation from retail investors in South Korea, driven by local demand for the asset.
Ki Young Ju, the founder of on-chain analysis firm CryptoQuant, referred to the Kimchi premium as a “pure retail FOMO indicator,” suggesting that Korean retail investors are getting back into the market.
Korea Premium Index(a.k.a. Kimchi Premium) is a pure retail FOMO indicator because
1/ There are no notable crypto funds in Korea
2/ Korea has very strict capital control policies
— Ki Young Ju (@ki_young_ju) August 8, 2021
The increased
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