Bitcoin's "kimchi premium," or the difference between prices on South Korean exchanges and other global avenues, declined on Wednesday as the cryptocurrency lost ground against the Korean won (KRW).

  • The price gap narrowed to 16% during the European hours, as bitcoin fell by over 6% to KRW 70,412,000 on the Upbit exchange, the largest in South Korea as per trading volumes, according to data source CoinGecko.
  • The price pullback happened after the exchange suspended KRW withdrawal and deposit service at 14:47 local time (5:47 a.m. UTC).
CoinDesk - Unknown

Bitcoin's price on Upbit

  • "Bitcoin dropped after Upbit announced withdrawal suspension," Ki Young Ju, CEO of the Korea-based blockchain analytics firm CryptoQuant, told CoinDesk in a Telegram chat.
  • "But there's also the possibility that someone figured out how to arbitrage the Kimchi premium opportunity," Ju added.
  • The Kimchi premium had swelled to a three-year high of 22% earlier Wednesday in a sign of retail frenzy.
  • However, executing a classic arbitrage strategy by purchasing bitcoin on western exchanges and dumping on Korean platforms is quite challenging because local exchanges only allow trading in KRW pairs, as discussed on Tuesday.
  • Some whales have been depositing coins on Korean exchanges, as tweeted by Ju. Investors typically move coins to exchanges when they want to liquidate their holdings.
  • Analysts say a potential dump in South Korea may not significantly impact bitcoin's global average because the Asian giant now contributes less than 2% of the worldwide trading volume versus 8% in 2017.
  • Bitcoin is currently trading near KRW 73,000,000 on Upbit and changing hands at $57,500 on major western exchanges – down 1% on the day, as per CoinDesk 20 data.
CoinDesk - Unknown

Bitcoin's Kimchi premium

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Investing in the Future of the Digital Economy
October 18-19 | Spring Studio, NYC