Bitcoin trading $1,000 higher in South Korea
Premium prices have returned to South Korea, where bitcoin is trading about $1,000 higher than elsewhere.
Cryptocurrency such as bitcoin will often trade at premium prices in South Korea, where its popularity has pushed up demand. This so-called "kimchi premium" largely disappeared in the recent bearish markets, as regulatory uncertainty from South Korea and a generally tempered outlook from speculators saw enthusiasm wane.
But now it seems to be back in force as South Korean regulators announce a shift towards normalisation of cryptocurrencies.
On Upbit and Bithumb, South Korea's largest and second largest exchanges by volume, bitcoin is trading at about $11,700 at the time of writing according to CoinMarketCap, a solid $1,000 above the average global price without factoring in South Korean exchanges ($10,720 at the time of writing according to LiveCoinWatch).
"While the threat of heavy regulation, or even a total ban on exchange trading, has hovered over bitcoin in recent weeks, reports this morning that the South Korean government are softening their stance have given traders confidence to buy," said Dennis de Jong, managing director at the UFX.com brokerage to Reuters.
Upbit and Bithumb alone account for about 4 to 5% of bitcoin's daily trade volume each. It's a solid amount but inflated slightly disproportionately due to the premium prices on South Korean exchanges.
For arbitrage traders used to profiting from these price differences, a solid premium is undoubtedly good news. It might also be a positive indication for other bitcoin speculators, suggesting that there's going to be more money coming into cryptocurrencies, which might generally help buoy prices and bolster enthusiasm.
It might also be worth remembering that the despite the rumours of a regulatory crackdown it was still perfectly possible to buy bitcoin in South Korea. People were just choosing not to, perceiving it to be an uncertain and unattractive option at the time. This might suggest that the high prices in South Korea reflect a relatively high degree of confidence in the future of bitcoin, rather than just hype.
Latest cryptocurrency news
- Amazon set to accept Bitcoin and cryptocurrencies for payments, claims anonymous source
- Expert analysis: Is Ethereum’s price recovery signal the start of a new bull market?
- Expert analysis: Bitcoin’s price rally could be linked to potential US Bitcoin ETF approval
- Bitcoin slips below US $30,000 as experts suggest the down trend will continue
- Expert analysis: Despite Ethereum’s latest dip, it can still reach AU $4k in the near term
Picture: Shutterstock
Disclosure: At the time of writing the author holds ETH, IOTA, ICX, VEN, XLM, NANO, SALT, BTC
