Crypto trading on South Korean exchanges began increasingly since the amended crypto regulation became effective in March. Possibly due to the crypto resurgence in the country, the price of Bitcoin significantly surged way beyond the price in the global market, as seen in the so-called “Kimchi Premium,” which is an indicator measuring the premium of the Bitcoin price across South Korea, compared to the global market.
Bitcoin Traded at Over $70,000 in Korea
Following a 23 percent increase in Kimchi premium, Bitcoin reached an all-time high (ATH) of over US$70,000 (79,422,000 won) early on Wednesday. BTC’s premium price in South Korea attracted the attention of many traders as it presented a good arbitrage trading opportunity. However, due to the newly-enacted regulation in the country, it wasn’t possible for traders to move off USD from the South Korean market.
The new cryptocurrency regulation prohibited exchanges in the country from serving foreign users. It also introduced strict capital flow restrictions, which makes it very difficult to move large funds from the country through cryptos – a measure aimed at reducing money laundering and terrorism financing.
Kimchi Premium Drops as Bitcoin Declined to $56,000
Later on Wednesday, the Kimchi Premium began plummeting from as high as 23 percent to 15 percent within a few hours.
Some traders blamed the recent correction in the market as a cause for the drop in the South Korean BTC premium. However, Ki-Young Ju, the CEO of CryptoQuant (an on-chain crypto analytics platform), said the premium might have dropped because some traders figured out how to cash out from the arbitrage opportunity.
As Kimchi Premium dropped, the price of Bitcoin on the global market declined to about US$56,000.
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