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Kimchi's "Premium" is back. Bitcoin (BTC) is trading by more than 6% higher across major South Korean crypto exchanges as of March 29.
Data from CryptoQuant show that the premium in the South Korean market was non-existent for many months and, in fact, dropped to around -6% in early February 2021 when BTC dipped below $30,000.
This premium forms when a particular Bitcoin trades higher on South Korean exchanges than it does on other markets. The return of this premium is considered a bullish sign suggesting that Bitcoin’s demand is likely outpacing its supply.During the past bull cycles, the premium was particularly high, especially in 2017 when BTC traded well over 20% higher on South Korean exchanges than on COINBASE and other large exchanges.
South Korea does not make up most of the global Bitcoin market, but it is still one of the major exchanges by daily volume. On CoinMarketCap, Bithumb is the seventh-largest exchange by daily exchange volume, with $1.3 billion in Bitcoin trading in the last 24 hours alone.
Why the Kimchi premium could be significant to Bitcoin
Although South Korea does not account for a majority share of the global Bitcoin market, it remains as one of the major exchange markets by daily volume.
$BTC sellers are not Koreans, no doubt about that.
@KiYoungJu ???
Bitcoin's premium started to rise again several weeks ago before Visa announced that it is processing transactions using the USDC token on the Ethereum blockchain. In the situation when the news broke, both Bitcoin's and Ethereum's prices rose sharply, leading to a strong recovery in the cryptocurrency market. It may contribute to the rapid adoption of the Bitcoin cryptocurrency by institutions this year, suggesting the potential for a broader Bitcoin rally. Ki Young Ju, CEO of CryptoQuant, stated: "I smell crypto's mass adoption here."
Market sentiment in Korea is not bad. $BTC sellers are not Koreans obviously. https://t.co/4UIneKZKuu
— Ki Young Ju ??? (@ki_young_ju) March 25, 2021
The premium was already rebounding in the past several weeks up before Visa announced that it is processing transactions using USDC on the Ethereum blockchain.
Bitcoin (BTC) is trading over 6% higher on some major Korean crypto exchanges as of March 29. The announcement may add more momentum to the rapid pace of institutional adoption so far this year and the possibility of a broader Bitcoin rally.
"I smell crypto mass adoption here," Ki Young Ju, the CEO of CryptoQuant, reacted to the news.
What traders think will happen next
According to the pseudonymous trader known as "Rekt Capital," if Bitcoin breaks above $59,000, a new all-time high becomes highly probable.
The trader noted:
"BTC is recovering this week after the down-side wicks of the previous 2 weeks showed slowing in the sell-side momentum $BTC will attempt to crack the confluent black diagonal & red horizontal resistance area (~$59,000) Break this area and #Bitcoin will reach new All-Time Highs."
Fellow trader "CryptoCapo" meanwhile said that this momentum can potentially take Bitcoin to new highs and above, possibly to even $80,000. He said:
"The panic didn't make any sense. Some people just want to see the world burn... Send it to $80k+"
