The Bitcoin kimchi premium is witnessing a resurgence in South Korea, as the nation faces heightened political instability. This situation has not only contributed to a decline in the Korean won (KRW) but also pushed the price of Bitcoin, the leading cryptocurrency, significantly higher.
Bitcoin Kimchi Premium Surges in South Korea
According to Ki Young Ju, CEO of CryptoQuant, the KRW-USD trading pair has dropped to a 15-year low, signaling a troubling lack of confidence among South Koreans in their fiat currency. As the KRW weakens, many South Koreans are turning to appealing asset classes such as Bitcoin to preserve their purchasing power amid growing economic uncertainties.
In a recent post on X, Ju explained how South Korean crypto enthusiasts are converting KRW into digital currencies like Bitcoin and USD-pegged stablecoin USDT on the Upbit exchange. Here, Bitcoin is trading at a premium of 3-5%, leading to the phenomenon colloquially known as the kimchi premium. This premium occurs when Bitcoin’s value on South Korean platforms outpaces that on other global exchanges.
The kimchi premium can often be linked to strong local demand, strict regulatory environments, and limited opportunities for arbitrage in South Korea’s cryptocurrency landscape. However, this time, the surge is largely a direct result of the depreciating KRW driven by escalating political chaos in the country.
As of this moment, Bitcoin’s price in South Korea is about 145,000,000 KRW, which translates to nearly $98,600. In contrast, on global platforms like Binance, it is valued at around $95,315. This stark price difference vividly illustrates the impact of the kimchi premium.
What’s Causing the KRW Decline?
The downturn of the South Korean won stems from continuing political unrest, significantly heightened since December 3. This was the day when the former president, Yoon Suk Yeol, briefly declared martial law—an action he quickly retracted. Following this incident, Han Duck-soo, the acting prime minister, faced impeachment by the country’s parliament.
These unfolding events have sent ripples through global markets, shaking faith in South Korea’s democratic structure and amplifying concerns that the nation is confronting one of the deepest political crises in recent history. A monthly chart analysis shows the KRW has plummeted to its lowest exchange value against the USD since March 2009.
In another post on X, Jeff Park, who leads alpha strategies at Bitwise, emphasized that the political strife in South Korea is centered on accusations of election fraud and eroding trust in the National Election Commission (NEC). Park remarked that the employment of impeachment as a political weapon, alongside allegations of external election meddling, highlights the vulnerability of democracy amid widespread disinformation. He posited that this situation serves as a global cautionary tale for democracies everywhere.
This political unrest has sparked a frenzy in the South Korean cryptocurrency market, resulting in unprecedented trading volumes. At the time of writing, Bitcoin remains at $95,315, reflecting a slight 0.2% decrease over the past 24 hours.
With the political climate remaining unsettled, the kimchi premium could persist as South Koreans seek to navigate these turbulent times by investing in Bitcoin. This series of events not only underscores the complex relationship between politics and cryptocurrency but also highlights the emotional weight carried by investors as they respond to changes in their nation’s stability.
