The Bitcoin (BTC) “kimchi premium” has returned to the South Korean cryptocurrency market, as the country faces political instability. This has led to a weakening of the Korean Won (KRW) and a rise in the price of the leading cryptocurrency.
Bitcoin Kimchi Premium Rising in South Korea
According to CryptoQuant CEO Ki Young-joo, the won-dollar trading pair has reached its lowest level in 15 years, reflecting waning confidence among South Koreans in their fiat currency. The won has fallen Paid South Koreans are investing in emerging assets such as Bitcoin to protect the purchasing power of their Korean currency during times of economic uncertainty.
In a mail At This price difference, commonly referred to as the “kimchi premium” for Bitcoin, occurs when BTC trades at a higher price on South Korean exchanges than on global platforms.
The so-called kimchi premium usually arises because… High local demandIncreased regulatory barriers and limited arbitrage opportunities in the South Korean cryptocurrency market. However, in this case, the premium is primarily driven by the weakness of the Korean won due to increasing political unrest in the country.
At the time of writing, Bitcoin is trading in South Korea for 145,000,000 KRW or approximately US$98,600, while on a global exchange like Binance, BTC is trading at US$95,315. The difference between these platforms highlights the impact of the kimchi premium.
What causes the South Korean won to depreciate?
The depreciation of the South Korean won can be attributed to the ongoing political unrest, which has intensified since December 3. On this date, former President Yoon Suk-yeol, now impeached, declared martial law for six hours before reversing the decision. Following this, the South Korean parliament dismissed Han Dak-soo, the country’s prime minister and acting president.
These dramatic developments have sent shock waves through global markets, undermining confidence in South Korea’s democratic institutions and raising fears that the country is facing its worst political crisis in decades. The monthly chart below shows how the Korean Won fell to its lowest value against the US Dollar since March 2009.
In separate mail On the Park commented:
The use of impeachment as a political tool, coupled with allegations of foreign interference in elections, highlights the fragility of democracy in the face of disinformation. This is not just a Korean story. It is a warning to democracies around the world.
Political unrest in South Korea has sent the cryptocurrency market into chaos fitWhich led to record trading volumes. At press time, Bitcoin is trading at $95,315, down 0.2% over the past 24 hours.
Featured image from Unsplash.com, charts from X and TradingView.com