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Kimchi premium hits 12% as Bitcoin market faces turmoil

Kimchi premium hits 12% as Bitcoin market faces turmoil

GrafaGrafa2025/02/04 02:20
By:Mahathir Bayena

The Kimchi premium, which indicates the price difference of Bitcoin (CRYPTO:BTC) on South Korean exchanges compared to global markets, has surged to 12%, marking its highest level since 2022.  

This increase comes amid significant market turmoil, as the cryptocurrency sector lost over $400 billion in value following U.S. President Donald Trump's announcement of new tariffs.  

These tariffs include a 25% levy on imports from Canada and Mexico, affecting energy products, and a 10% tax on various Chinese goods aimed at addressing trade imbalances.  

While previous spikes in the Kimchi premium were often attributed to strong local demand for Bitcoin, analysts suggest that this rise is primarily influenced by external factors, particularly the strengthening U.S. Dollar Index.  

As the crypto market reacted to escalating trade tensions, Bitcoin's price fell by approximately 12%, leading to over $2.2 billion in liquidations.  

Interestingly, while Bitcoin's value declined, the Kimchi premium increased, indicating a shift in trading behavior among South Korean investors.  

Blockchain researcher Ki Young Ju noted that the premium rose as Bitcoin reached a local bottom, not due to increased buying from Korean traders but rather because existing holdings were being converted into U.S. dollars.  

This trend reveals that many South Korean traders are opting to sell their Bitcoin for USD instead of converting it into Korean won, which has contributed to the widening price gap between local and international exchanges.  

“Few Koreans are converting BTC into KRW,” Ju stated, highlighting a broader trend where capital outflows may be driving the premium rather than increased local demand.

At the time of reporting, the Bitcoin (BTC) price was $101,549.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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