The so-called Kimchi Premium, which measures Bitcoin Price Premium (BTC), has fallen in the South Korean cryptocurrency market.
The premium fell from 22% to 15% in a few hours on April 7 and continues to fall on the major stock exchanges in South Korea.
Significant decline in South Korea’s Bitcoin market
As noted by CryptoQuant CEO Ki Jung Joo, the price of bitcoin has fallen particularly hard on South Korean stock exchanges.
As the bitcoin price fell, the kimchi premium fell side by side. But as the price of BTC continued to fall on the South Korean stock exchanges, the premium fell rapidly over several hours.
Bitcoin has been hit hard on South Korean stock exchanges. Source: Ki Young Joo
The reasons for the low insurance premium since it happened can be for two reasons.
First, traders outside South Korea may have found a way to successfully arbitrate the premium. This could happen if traders from other Asian markets coordinate with whales in South Korea to sell BTC and withdraw the same day.
Second, altcoins, which have gained momentum over the week, have sharply corrected. When capital leaves the altcoin market, traders can also sell BTC and Ether (ETH), which drive down large cryptocurrencies.
“It seems that someone has finally figured out how to balance this special kimchi ability. The trading volume of the 30-minute time frame on upbitglobal, the largest Korean stock exchange, was higher than on @ Binance. This decline appears to be related to the decline in kimchi. One proof of arbitrage: BithumbOfficial, one of the largest exchanges in Korea, increases the average bitcoin flow in USD, while all exchanges fall. It seems that some whales list bitcoins on Korean stock exchanges. ”
For example, XRP has consistently been one of the most popular cryptocurrencies in the South Korean market over the past week.
As reported by Cointelegraph, XRP rose sharply against Bitcoin and climbed above $ 1 for the first time in more than three years.
However, due to falls in altcoins such as XRP, it is possible that the market sentiment for Bitcoin and Ether has also deteriorated in the Asian market, which causes the premium to fall.
Is this the highest signal?
When the size of the kimchi bonus fell in 2017, the price of bitcoin fell more than 50% in a few days.
This time, the bitcoin price fell by 5% to $ 56,000 and started to recover quickly after that.
The probability of a short-term recovery in the cryptocurrency market is still high given that there have been significant liquidations in the last 48 hours.
For example, a Stellar Lumen (XLM) deal resulted in a $ 84 million settlement. With over $ 1 billion liquidated in the last 24 hours, the cryptocurrency derivatives market is likely to recover.
Financing of bitcoin on major futures exchanges was around 0.15% before the recession. This is 15 times higher than the default value of 0.01%, which indicates that the derivatives market was very hot.
As the figure above shows, however, financing rates are still relatively high, which indicates that interest rates may fall further in the short term.