South Korea’s “premium kimchi” has been discounted again, meaning cryptocurrencies such as Bitcoin are now cheaper to buy on South Korean exchanges.
The phenomenon is named after the Korean cuisine kimchi. Kimchi premium indicates when the price of Bitcoin (BTC) is trading higher on the South Korean exchange than on other markets.
According to data from blockchain analytics provider CryptoQuant, the Korea Premium index has fluctuated between -0.24 and 0.01 between February 17 and February 19.
At the time of writing, CoinMarketCap shows BTC trading at $24,464 on Coinbase and $24,487 on Binance.
In comparison, the Korean exchange Bithumb has been listed at $24,386, while one of the largest exchanges in South Korea, Upbit, trades Bitcoin for $24,405.
The situation is similar for the second largest crypto by market cap, Ether (ETH).
At the time of writing, data on CoinMarketCap shows ETH trading for $1,687 on Coinbase and $1,691 on Binance – but ETH is changing hands for $1,682 on Bithumb and $1,683 on Upbit.
According to Doo Wan Nam, chief operating officer of node validator and venture capital fund Stablenode, Kimchi’s premium turning into a discount marks a decline in interest from Korean retail investors.
“It generally means a fall in interest in crypto from Korean retail, which ironically is generally a better time to buy because you know you can always sell yours to Korean gamblers for a 20% premium later during FOMO,” he said.
Korean Premium (Kimchi) is now Korean Discount
It generally means a fall in interest in crypto from Korean retail, which ironically is generally a better time to buy because you know you can always sell yours to a Korean player at a 20% premium later during FOMO. pic.twitter.com/FFcvdi93PE
— O | StableLab @Seoul (@DooWanNam) February 19, 2023
Some traders try to profit by trading price differences between different exchanges, a practice known as arbitrage.
related: Korean regulators are investigating banks for more than $6.5B tied to Kimchi premiums
In the past, the size of Kimchi’s premium has been linked to news, with a decline recorded when there was bad news about the South Korean crypto exchange.
The premium disappeared in early 2018 when the South Korean government announced plans to crack down on cryptocurrency trading.
A 2019 paper from the University of Calgary found that Premium Kimchi first appeared in 2016.
According to researchers, between January 2016 and February 2018, South Korean Bitcoin exchanges charged an average of 4.73% more than their United States counterparts.