Bitcoin (BTC) price continues to fluctuate between $ 56,000 and $ 60,000 as the so-called “kimchi premium” rises to annual highs.
The kimchi premium is formed when bitcoin is traded in South Korea at a higher price than other major markets such as the United States.
In 2017, the kimchi premium exceeded 20%, giving Bitcoin trading around $ 24,000 in South Korea, while surpassing nearly $ 20,000 in the United States.
The premium resumed last week, March 29th, at 6%, and has since risen to around 11%.
The premium for kimchi is 11%, is it harmful for Bitcoin?
The last time the kimchi premium rose to an all-time high, it hit the bitcoin market and underwent a sharp correction almost immediately after that.
Although the premium indicates that the South Korean cryptocurrency market is showing signs of overheating, it is not high enough to mark a peak.
Ki Yong Joo, CEO of CryptoQuant, said the premium is worrisome, but that Bitcoin’s underlying profile is strong.
However, the difference between this time and 2017 is that South Korea accounts for only 1.7% of the turnover in the global bitcoin market.
As such, Key explained that although the South Korean market is experiencing a downturn as a result of higher premiums, it will not have as much impact as it did in 2017. He noted:
“The US dollar bitcoin fundamentals still look good, but the Korean bubble worries me. Bitcoin prices rose significantly, and the trading volume of Korean cryptocurrencies has outpaced the National Stock Exchange (KOSPI). Even if the bubble collapses, the impact is unlikely to be significant, as it is 1.7%. Just. ”
More importantly, unlike in 2017, the steady rise in Bitcoin is led by institutions and high net worth investors, as evidenced by the massive inflow of funds from Coinbase.
But one of the reasons why many analysts are so concerned about the crowded cryptocurrency exchange market in South Korea is that there is great interest in the new cryptocurrency assets.
Instead of Bitcoin and Ether (ETH), for example, the larger cryptocurrencies on Bithumb are new altcoins that have been around for two months.
Wealthy investors keep buying
Less than a week ago, on March 29, Kee confirmed that selling bitcoins is not a perfect deal, as there is a lot of ripple on Coinbase Pro.
Typically, outflows from large exchanges involve institutional investors purchasing bitcoins and transferring their assets to their own portfolios.
Sa da key:
“Opening a short position with Bitcoin in the US dollar does not seem like a good idea at the moment. It is unlikely to go below 52,000 as institutions can buy BTC dollars at this level.”
Since then, Bitcoin has gained around 5% and has a relatively stable uptrend, possibly because the US dollar is showing signs of weakness again.