South Korea’s Kimchi Premium for Bitcoin hit a 27-month high at 10.32% on Wednesday. Following a momentary dip to $60,000, Bitcoin bounced back, rising 4% in the last 24 hours and surpassing $66,800.
Meanwhile, with the help of this Kimchi Premium, notable figure Sam Bankman-Fried, the bankrupt FTX CEO claimed to have made up to a million dollars a day leveraging this premium.
CryptoQuant CEO Ki Young Ju recently shared on X that Bitcoin’s price premium in South Korea has surged to an impressive 10%, hitting its highest point in two years. Ju highlights the comeback of Korean retail investors in the crypto market, signaling renewed interest and confidence among local traders.
Breaking down the Kimchi Premium, it represents the fascinating price difference between cryptocurrency assets on South Korean exchanges and their international counterparts. This premium has steadily climbed since the start of February, following the upward trajectory of BTC’s overall value.
By the Numbers
Let’s dive into the figures.
The Korea Premium index tells a compelling story, jumping from 5.19 on February 28 to an impressive 6.84 on March 5. This aligns perfectly with Bitcoin’s record-breaking surge to over $69,200 on the same day, fueled by ongoing investments in Bitcoin ETFs in the United States.
During the 2021 bull run, the Kimchi Premium peaked at 21.56% on May 19, aligning with Bitcoin’s price exceeding $36,000 before eventually reaching its previous all-time high in November 2021.
However, despite these gains, strict capital controls in Korea make it challenging for foreigners to capitalize on the premium.
An intriguing historical example is Sam Bankman-Fried, the founder of the now-bankrupt Alameda Research and FTX exchange. Bankman-Fried claimed that the premium reached as high as 50% during 2019 and 2020, enabling his firm to generate up to a million dollars a day.
While the United States sees a surge in Bitcoin ETFs, South Korea currently relies on retail spot buying as the primary driver of local prices.
Lee Bok-hyun, the governor of the Financial Supervisory Service, hints at discussions regarding the legalization of Bitcoin Spot ETFs in the country. The outcome of these talks could reshape the landscape, potentially ushering in a new era of institutional participation in South Korea’s crypto market.
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