Kimchi Premium Surges – What’s Driving the Spike in South Korea?
South Korea’s Bitcoin Kimchi Premium has reached a 10-month high, fueled by escalating concerns over the trade war initiated by Donald Trump’s administration.
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The announcement of strict import tariffs on Canada, Mexico, and China has heightened investor concerns about prolonged trade tensions and rising U.S. inflation. This uncertainty has triggered over $2 billion in liquidations across the crypto market in the past 24 hours.
The Asian crypto markets have also been affected.
According to CryptoQuant, on the night of February 2–3, 2025, the Kimchi Premium surged to 9.7%, marking its highest level since April 2024, when it peaked at 13%.
What Is the Kimchi Premium?
The Kimchi Premium refers to the price difference between Bitcoin (or other cryptocurrencies) on South Korean exchanges compared to international markets. This gap is primarily caused by strict capital controls and regulatory restrictions that limit foreign investors from participating in South Korea’s crypto market, making arbitrage difficult.
As a result, South Korea has become a key hub for crypto trading, where arbitrage traders exploit the price disparity by using local investors as liquidity providers.
For a deeper dive into this phenomenon, check out our article: “Kimchi Premium Arbitrage and the Intense Competition in South Korea.”
According to Presto Research analyst Min Jung, the Kimchi Premium tends to increase during bull markets, as Korean investors rush to buy crypto. However, it can also surge during panic sell-offs, since short-selling pressure on Korean exchanges is lower than on global platforms.
Market Impact
If selling pressure from U.S. investors continues, the Kimchi Premium may remain elevated. However, historically, its average level has been around 5%. A market rebound and price recovery could gradually bring the premium back to normal levels.
Despite strict regulations, South Korea remains one of the most active crypto markets in the world, with a particularly strong demand for altcoin trading.
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