Bitcoin Drops 6% in Korea, Shrinking the 'Kimchi Premium'

Bitcoin lost ground after Upbit suspended KRW deposits and withdrawals.

Apr 7, 2021 at 9:01 a.m. UTC
Updated Sep 14, 2021 at 12:37 p.m. UTC

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).

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.

Bitcoin's Kimchi premium

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