The Bitcoin kimchi premium in South Korea has plummeted significantly amid a broader market decline, signifying weakened enthusiasm among digital asset investors in the country.
According to data from CryptoQuant, the Bitcoin kimchi premium slumped to 1.5% on Friday during the afternoon trading session in Asia.
Bitcoin Kimchi Premium Slumps
For the uninitiated, the kimchi premium is an indicator of the difference between Bitcoin’s valuation on South Korean exchanges and global crypto trading platforms. The term also refers to a South Korean dish.
Bitcoin’s (BTC) price on South Korean exchanges differs from that of global platforms because of capital control policies prohibiting foreign investors from trading on local platforms. Likewise, the policies have banned local investors from engaging in arbitrage trades. These prohibitions have led to a limited crypto supply in South Korea, causing wide price gaps due to high demand.
The kimchi premium has become one of the key indicators of monitoring changes in the crypto space and investor sentiment. A high premium signifies bullish investor sentiment compared to the international market, while a lower figure is a sign of bearish sentiment and plummeting buying pressure.
With the premium currently at 1.54%, the interest of South Korean investors in Bitcoin has declined. This lack of enthusiasm is also seen in the top local exchanges witnessing reduced trading volumes, according to data from CoinMarketCap.
A Positive Sign?
The last time the Bitcoin kimchi premium hovered around its current level was in mid-February when BTC was worth around $48,200. By the first week of March, the index had soared to a 27-month high of 10.32%. It rose in the following weeks, hitting 11.44% when BTC recorded a new all-time high.
However, the premium has steadily declined since BTC fell from its all-time high and settled below $70,000. Since April, there has been a bloodbath in the crypto market, and the index has not been exempted. BTC has slumped below $60,000, touching $56,700 before rebounding. At the time of writing, the asset was trading at $63,000, up 3.2% in the past 24 hours.
Nevertheless, the current kimchi premium level may be a positive sign for the crypto market, as it signals there is enough room for a rally, and a major BTC recovery could be witnessed soon.
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