Bitcoin back above $60k after return of ‘Kimchi Premium’

Strong US jobs data as well as buyer’s appetite out of Asia pushed Bitcoin sharply higher again in the past 24 hours. At the time of writing, the largest digital coin is trading for $61,300.

You could think that due to the so-called ‘Black Monday’ crash of the stock exchanges in Tokyo and Seoul, young Japanese and South Koreans would go completely risk-off and park their money on the sidelines, but you’d be mistaken. Apparently since last Monday the ‘Kimchi Premium ‘ for Bitcoin in Seoul rose again to more than 4%.

This means that once again, the largest digital currency is being sold at a 4% higher price in South Korea compared to the rest of the world.

FTX

The man who discovered the term ‘kimchi premium’ (named after the popular fermented vegetable dish) in Bitcoin was none other than Sam Bankman-Fried, the CEO of FTX, the major crypto platform that went bankrupt in 2022. Sam was convicted last year to serve a 25-year prison sentence.

The term refers to the fact that there is so much demand for Bitcoin in Seoul that it is sold there at a higher price (measured in US dollars) compared to the rest of the world.

In 2017-2018, during the first known Bitcoin ‘bull run’, when the price went to $20,000 for the first time, the ‘Kimchi Premium’ was sometimes 10% as about a third of all South Korean youngsters owned crypto.

According to a report by CNBC, the ‘Kimchi Premium’ was at its peak in January 2018, with a price that was as much as 50% higher on some Asian platforms than in the United States. During the 2020-2021 bull run, the ‘premium’ was only 5%, which is still remarkable of course.

After Bitcoin rose to $74,000 during March this year, the ‘Kimchi Premium’ rose to 10%, which was seen as a ‘bullish indicator’.

In recent months, the ‘premium’ fell again, until it almost completely disappeared at the end of July.

However, the change came on Monday. The moment the KOSPI (the local stock market index) plunged by about 8% and the government activated a ‘circuit breaker’ (to pause all trading for 20 minutes) and the price of Bitcoin also started to fall sharply.

After Bitcoin dipped below the price of $50,000 again a little later, the ‘Kimchi Premium’, especially on local major crypto platforms such as Bithumb and Upbit, came back with a difference of about 5%.

The revival of this premium indicates increased market activity and demand in South Korea.