Korean Bitcoin Kimchi Premium, 5 Million Won More Expensive Than U.S.

The so-called 'Kimchi Premium (KIMP)' phenomenon in which the price of domestic virtual assets is higher than that of overseas is rising again. Until the beginning of this year, the 'Reverse Premium' of which foreign transaction prices were higher than the domestic price continued, but the recent enthusiasm for investing in domestic virtual assets is heating up and there are signs that Kimchi Premium is intensifying.

The virtual asset industry said, "As domestic individual investors are buying a lot of virtual assets, the supply is not keeping up with the demand." He diagnosed that the amount of coins in the exchange itself is decreasing.

The Kimchi Premium phenomenon, in which the price of domestic virtual assets is traded higher than that of overseas, has recently emerged prominently.

Kimchi Premium can also be interpreted as meaning that Korean investors will buy virtual assets at higher prices than the global market price. For this reason, when the Kimchi Premium phenomenon occurs, general investors who buy virtual assets in Korean won in Korean virtual asset exchanges may be at a disadvantage.

As of the afternoon of the 25th, bitcoin (BTC) is being traded in the range of 64.6 to 64.7 million won on the four major domestic virtual asset exchanges, including Bithumb, Upbit, Coinone, and Korbit. On the other hand, the Bitcoin price of Binance and Bitfinex is formed at 59.7 million won. This means that up to 5 million won of bitcoin living in Korea is more expensive.

Along with Bitcoin, Ethereum (ETH), another virtual asset leader, also has a kimchi premium of 8% as of the 25th. The Ethereum transaction price of all four domestic exchanges is around 1.95 million won, while the Ethereum price of foreign virtual asset exchanges such as Binance and Bitfinex is only 1.8 million won.

Until the beginning of this year, there was a reverse premium for foreign virtual asset transaction prices. This is because, as U.S. listed companies and conglomerates announced their bitcoin investments and business successively from the end of last year, the buying trend of bitcoin by institutions centered in North America was remarkable. An industry official diagnosed, "Since last year, the trend of selling bitcoin in the Asian market and buying bitcoin in the North American market has continued."

Given the high demand for bitcoin acquisition in the overseas virtual asset market, some domestic investors have also earned market profits by sending bitcoins to foreign virtual asset exchange wallets to trade.

However, as the domestic stock market was sluggish this month, the flow of funds from the stock market to the virtual asset market was detected. KOSPI, which had an average transaction value of 26 trillion 4,778 billion on January of this year, decreased by more than 40% to 15,204.7 billion this month. On the other hand, the average daily trading value of Upbit jumped from 1 trillion won to 10 trillion won during the same period.

An official from a virtual asset exchange said, "Last year, global conglomerates led the price increase, and until the bitcoin price soared, there was no significant change in the domestic market." The transaction volume itself has increased significantly,” he explained.

There is also an analysis that the convenience of domestic virtual asset trading compared to other countries played a part in the Kimchi Premium phenomenon. An official from a virtual asset financial company said, "The Korean exchange's KRW trading system is much more convenient than the foreign exchange's legal currency trading," and said, "In this environment, Kimchi Premium is being formed as many individual investors are buying virtual assets.