Bitcoin Soars To Record Highs In South Korea

Bitcoin Soars To Record Highs In South Korea

Bitcoin's price on South Korean exchanges has soared to more than $ 71,000 due to the ‘kimchi’ premium. Kimchi premium has been a harbinger of an end to the bull market in the past, but analysts think it may be different.

Bitcoin saw 79,422.000 won ($71,162) on Upbit, the country's largest exchange, at around 05:30 BST today. At the same time, BTC/USD parity in Coinbase was at 57.733.

In January may May 2018, the kimchi premium was measured at 47% and in May 2017 at 63%. Kimchi saw today above 20%, the highest level in the last 3 years, but then fell below 20%.

What is Kimchi premium, what does it mean?

Kimchi premium represents the shift between the price of Bitcoin on South Korean exchanges and the price of Bitcoin on global exchanges. Kimchi was first seen in early 2016, according to the University of Calgary.

Investors in the country use BTC / KRW parity when trading on exchanges. Foreign exchanges that do not receive a license from the regulator cannot support KRW parity. This makes a difference between the South Korean market and the global Sunday market.

The kimchi premium observed in past bull markets may have resurfaced due to “restrictions imposed by the government against making profits through arbitrage on local exchanges,” forkast reported.

Taking bitcoin with US dollars at an exchange rate in the country and arbitrage can be considered a crime under the Currency Transactions Act. Ordinary investors in South Korea cannot transfer more than $ 50,000 overseas for a year because of the capital controls imposed.

An upper limit is also applied for purchases that can be made at the exchange rate with a credit card purchased from Korea.

Demand may rise in Korea

In recent years, when kimchi premium has risen massively, the Bulls in the market have begun to lose power. "It's impossible to know whether the kimchi premium will peak or continue to rise," said Arcane Research analyst Vetle Lunde. But his condition worries me."I said.

However, the rise in the kimchi premium may not be as alarming as it has been in recent years. "The Korean market was home to 7.9% of global cryptocurrency trading in 2017," CryptoQuant CEO Ki Young Ju told CoinDesk. That number has now fallen below 2%."I said. Therefore, the peak and fall of the kimchi premium is not expected to “significantly affect” the global market.

It is thought that this increase may be a reflection of increased demand. The rising unemployment rate may have driven people into digital assets, according to Forkast News. Tae Eon Koo, a lawyer at a law firm called Law Lin, said::::

"With the exception of a few Internet giants in the country, stock market investors do not have many options to invest in. People are now more interested in investing in digital assets than investing in the stock market

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