Amid growing political tensions in South Korea, there is a significant rise in the Bitcoin kimchi premium, indicating a price disparity between Korean and international exchanges.
Reasons for Bitcoin Kimchi Premium Increase
According to Cryptoquant, the Korea Premium Index has risen by 3%. South Koreans are paying 3% more for Bitcoin than Americans as they seek protection from the plummeting won, which has reached a 15-year low against the dollar. On Upbit, South Korea’s largest crypto exchange, Bitcoin is priced at 145,000,000 won (about $98,600), while on Coinbase in the U.S., it is valued at approximately $96,700. It is important to note that Bitcoin prices in South Korea are mainly influenced by retail investors as institutional and foreign investors have limited access.
Political Situation in South Korea
The 3% increase in the Bitcoin Kimchi Premium follows escalating political tensions in the country. The South Korean parliament recently voted to impeach Prime Minister Han Duck-soo and the acting President, only a few weeks after impeaching President Yoon Suk Yeol. The unfolding drama revolves around election fraud and the erosion of trust in South Korea’s National Election Commission (NEC). Last year, a cybersecurity audit conducted by the National Intelligence Service (NIS) revealed alarming vulnerabilities in the NEC's systems.
Crypto Boom in South Korea
Despite the rising political situation, the crypto market continues to expand in South Korea. According to earlier reports, over 30% of its population is now engaged in crypto investments. Between July and November 2024, the total market capitalization rose from 58 trillion won to 102.6 trillion won. South Korean investors now hold an average of 6.58 million won in crypto, reflecting a growing trust in the asset class.
The rising Bitcoin kimchi premium in South Korea highlights significant domestic political and economic challenges, while the continued growth of interest in cryptocurrencies signals substantial changes in investor trust towards traditional and new asset forms.
