Kimchi Premium Surges to Three-Year High Amid Asian Crypto Demand

The Kimchi Premium, a measure of the price difference between Bitcoin in South Korea and the global average, has surged to a three-year high, reaching 11.9%. This significant gap reflects the growing demand for cryptocurrencies in the Asian market, particularly in South Korea.

The strength of the U.S. dollar and global trade wars have contributed to the rise of an Asian counterpart to Bitcoin. The Kimchi Premium index has not seen such a high since 2018, indicating a significant price disparity between the South Korean market and the rest of the world.

The primary driver behind the growth of Kimchi Premium is the strong domestic demand for cryptocurrencies in Asia. Despite the global decline in crypto prices, South Korean traders have continued to register a significant markup on Bitcoin, even when its price dropped to $93,900.

The U.S. dollar index may also play a role in the surge of Kimchi Premium. When the index created a downward thrust on global BTC prices, it triggered pressure on the South Korean market, leading to an increase in the Kimchi Premium.

Traders and analysts worldwide are exploring the reasons behind the rise in Kimchi Premium. Cryptoquant CEO Young Ju from South Korea suggests that the surge is not due to Korean traders buying Bitcoin at a lower price. Instead, BTC is being converted into USD rather than Won, indicating that most domestic traders are participating in global markets.

This capital outflow, rather than a spike in demand, is the likely cause of the soaring Kimchi Premium. Research suggests that pressure selling among investors in the U.S. could lead to the growth of Asian crypto platforms. The empirical average of Kimchi Premium is already 5%, and a rebounding market could lower this level.

South Korea has long been focused on altcoin trading, making it one of the most active and flourishing crypto markets worldwide. With Korean Upbit becoming the fourth-largest centralized exchange globally, South Korean traders will continue to play a significant role in the future of the crypto market.